[A.M. No. 02-1-11-SC.

February 19, 2002]

RE:DESIGNATION OF AN INTELLECTUAL PROPERTY JUDGE FOR MLA.
EN BANC
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated FEB 19 2002.
A.M. No. 02-1-11-SC (Re:Designation of an Intellectual Property Judge for Manila.)
(A) - Acting on the memorandum dated 15 January 2002 of Deputy Court Administrator
Christopher O. Lock, favorably endorsed by Court Administrator Presbitero J. Velasco,
Jr., the Court hereby designates Branch 24 of the Regional Trial Court of Manila,
presided over by Judge ANTONIO M. EUGENIO, JR., as Special Intellectual Property
Court for Manila in substitution of Branch 1 of said Court which was designated Special
Intellectual Property Court, then presided over by Judge Rebecca de Guia Salvador
(now Associate Justice of the Court of Appeals), pursuant to Administrative Order No.
113-95 dated 5 October 1995.
As judge of the Special Intellectual Property Court, Judge Antonio M. Eugenio, Jr. shall
try and decide cases involving violations of intellectual property rights under the
Intellectual Property Code (R.A. No. 8293) committed within the City of Manila.
The earlier designation of Branch 1 of the Regional Trial Court of Manila as a Special
Intellectual Property Court is hereby REVOKED, and the cases involving violations of
intellectual property rights earlier assigned to said Branch 1 pursuant to and by virtue of
Administrative Order No. 113-95 are hereby re-assigned to Branch 24 of said Court.
(B) - Furthermore, acting on the recommendation of Hon. Associate Justice Reynato S.
Puno, Chairman of the Committee on Revision of the Rules of Court, and the Office of
the Court Administrator, and in order to ensure speedy disposition of cases involving
violations of intellectual property rights under the Intellectual Property Code (R.A. No.
8293), the following Regional Trial Courts (RTCs) are hereby designated Special
Intellectual Property Courts:
Region 1:
1)Hon. Antonio M. Esteves
Presiding Judge, Branch 5
RTC, Baguio City
2)Hon. Manuel L. Argel

Presiding Judge, Branch 65

RTC, Laoag City
Region 2:
1)Hon. Rolando R. Velasco
Presiding Judge, Branch 6
RTC, Aparri, Cagayan
Region 5:
1)Hon. Vladimir B. Bruselas
Presiding Judge, Branch 6
RTC, Legazpi City
2)Hon. Filemon B. Montenegro
Presiding Judge, Branch 26
RTC, Naga City
Region 8:
1)Hon. Frisco T. Lilagan
Presiding Judge, Branch 34
RTC, Tacloban City
Region 12:
1)Hon. Albert B. Abragan
Presiding Judge, Branch 3
RTC, Iligan City
The foregoing Special Intellectual Property Courts shall try and decide cases involving
violations of intellectual property rights defined under the Intellectual Property Code
committed within their respective territorial areas.Since there are only a few cases of
violations of intellectual property rights now pending in other branches of the
aforementioned Regional Trial Courts, such cases shall remain with and shall be
decided by the branches to which they have been assigned.Only cases hereafter filed
may be assigned to the above designated special courts.
(C) - Finally, in order to ensure a just and equitable distribution of cases among the
Judges concerned, all the aforementioned Special Intellectual Property Courts shall
continue to participate in the raffles of other cases:Provided, however, that the
Executive Judges concerned shall adopt a procedure whereby every intellectual
property right case assigned to a Special Intellectual Property Court should be
considered a case raffled to it and be duly credited to such court.

This Resolution shall take effect immediately and the Office of the Court Administrator
shall implement it.

G.R. No. 161693

June 28, 2005

MANOLO P. SAMSON, petitioner,

vs.
HON. VICTORIANO B. CABANOS, In his capacity as Acting Presiding Judge, Regional Trial
Court of Antipolo City, Branch 71,
PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.
DECISION
PUNO, J.:
Petitioner Manolo P. Samson seeks the reversal of the orders dated January 22, 2003 and
November 17, 2003 issued by Presiding Judge Felix S. Caballes and Acting Presiding Judge
Victoriano B. Cabanos, respectively, of the Regional Trial Court (RTC) of Antipolo City, Branch 71, in
relation to Criminal Case No. 02-23183. The assailed orders denied petitioners motion to quash the
information for unfair competition filed against him before said court.1 Petitioner also prayed that a
temporary restraining order and/or preliminary injunction be issued to enjoin respondent judge from
further proceeding with Criminal Case No. 02-23183 until the resolution of the instant petition. The
Court issued a temporary restraining order on February 18, 2004.2
The background facts: Petitioner was charged with the crime of unfair competition before the RTC of
Antipolo City in an Information that states:
The undersigned Senior State Prosecutor of the Department of Justice hereby accuses MANOLO P.
SAMSON for violation of Sec. 168.3 (a) in relation to Secs. 123.1 (e), 131.3 and 170 of RA 8293
otherwise known as the Intellectual Property Code of the Philippines, committed as follows:
That on or about the first week of November 1999 and sometime prior or subsequent thereto, in
Cainta, Rizal, Philippines, and within the jurisdiction of this Honorable Court, above-named accused,
owner/proprietor of ITTI Shoes Corporation located at F.P. Felix Avenue, Cainta, Rizal, did then and
there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products
such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely
identical to and/or colorable imitations of the authentic Caterpillar products and likewise using
trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of
the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and
owner of the following internationally famous marks: "CATERPILLAR", "CAT", "CATERPILLAR",
"CAT", "CATERPILLAR & DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and "TRACKTYPE TRACTOR & DESIGN".
CONTRARY TO LAW.3

Petitioner moved to quash the information on the ground that the court has no jurisdiction over the
offense charged in the Information. He argued that Section 170 of Republic Act (R.A.) No.
82934 provides that the penalty for violation of Section 168 thereof is imprisonment from two (2) to
five (5) years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand
pesos (P200,000.00), and R.A. No. 76915 amending Batas Pambansa (B.P.) Blg. 1296 vested the
Metropolitan Trial Courts (MTC) exclusive original jurisdiction over all offenses punishable with
imprisonment not exceeding six (6) years irrespective of the amount of the fine.7Presiding Judge
Felix S. Caballes denied the motion for lack of merit in his order dated January 22, 2003.8Petitioner
filed a motion for reconsideration which was likewise denied by Acting Presiding Judge Victoriano B.
Cabanos.9
Petitioner filed the instant petition for certiorari before this Court on pure question of law:
Whether or not the respondent Regional Trial Court has jurisdiction over the offenses charged in the
subject information where the penalty therein range from two (2) years to five (5) years, pursuant to
Section 170 of R.A. 8293, in the light of the enactment of Republic Act No. 7691, amending B.P. Blg.
129, which vests exclusive original jurisdiction on the Metropolitan Trial Courts over all offenses
punishable with "imprisonment not exceeding six (6) years irrespective of the amount of fine", in
relation to Section 163 of R.A. No. 8293.10
Petitioner reiterates his argument before the trial court in support of his motion to quash. He
contends that Section 170 of R.A. No. 8293 provides that the penalty to be imposed upon any
person guilty of violation of Section 168 of the law is "imprisonment from two (2) to five (5) years and
a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos
(P200,000.00)." Under Section 2 of R.A. No. 7691, amending Section 32 of B.P. 129, the MTC shall
exercise exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding
six (6) years irrespective of the fine. As petitioner is charged with an offense penalized by
imprisonment not exceeding six (6) years, the jurisdiction to try the case lies with the MTC and not
the RTC. In addition, petitioner submits that the old Trademark Law, R.A. No. 166, conferring
jurisdiction on the Courts of First Instance (now RTC) over complaints for unfair competition, has
been repealed by Section 239 of R.A. No. 8293. He cites the Courts decision in Mirpuri vs. Court
of Appeals.11
The petition must be dismissed.
It appears that petitioner had already raised the same issue and argument before this Court in the
case ofSamson vs. Daway,12 decided on July 21, 2004. That case involved exactly the same facts
and issue as in this case, except that the information for unfair competition against petitioner was
filed before the RTC of Quezon City. We held in that case:
The issues posed for resolution are - (1) Which court has jurisdiction over criminal and civil cases for
violation of intellectual property rights? xxx
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for
infringement of registered marks, unfair competition, false designation of origin and false description
or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to
Two Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty
thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00) shall be imposed on
any person who is found guilty of committing any of the acts mentioned in Section 155

[Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and
False Description or Representation].
Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under
Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with
appropriate jurisdiction under existing laws, thus SEC. 163. Jurisdiction of Court. - All actions under Sections 150, 155, 164 and 166 to 169 shall be
brought before the proper courts with appropriate jurisdiction under existing laws. (Emphasis
supplied)
The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark
Law) which provides that jurisdiction over cases for infringement of registered marks, unfair
competition, false designation of origin and false description or representation, is lodged with the
Court of First Instance (now Regional Trial Court) SEC. 27. Jurisdiction of Court of First Instance. - All actions under this Chapter [V - Infringement]
and Chapters VI [Unfair Competition] and VII [False Designatiion of Origin and False Description or
Representation], hereof shall be brought before the Court of First Instance.
1avvphi1.net

We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No.
8293. The repealing clause of R.A. No. 8293, reads SEC. 239. Repeals. - 239.1. All Acts and parts of Acts inconsistent herewith, more particularly
Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of
the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as
amended, are hereby repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it
would not have used the phrases "parts of Acts" and "inconsistent herewith;" and it would have
simply stated "Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles
188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree
No. 285, as amended are hereby repealed." It would have removed all doubts that said specific laws
had been rendered without force and effect. The use of the phrases "parts of Acts" and "inconsistent
herewith" only means that the repeal pertains only to provisions which are repugnant or not
susceptible of harmonization with R.A. No. 8293. Section 27 of R.A. No. 166, however, is consistent
and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction
over violations of intellectual property rights with the Metropolitan Trial Courts, it would have
expressly stated so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in case of conflict between a general law
and a special law, the latter must prevail. Jurisdiction conferred by a special law to Regional Trial
Courts must prevail over that granted by a general law to Municipal Trial Courts.
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over
violations of intellectual property rights to the Regional Trial Court. They should therefore prevail
over R.A. No. 7691, which is a general law. Hence, jurisdiction over the instant criminal case for
unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is
imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00
to P200,000.00.

In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual
property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002
designating certain Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the
Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property
Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated
as Special Commercial Courts.
The case of Mirpuri v. Court of Appeals, invoked by petitioner finds no application in the present
case. Nowhere inMirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No.
8293. Neither did we make a categorical ruling therein that jurisdiction over cases for violation of
intellectual property rights is lodged with the Municipal Trial Courts. The passing remark in Mirpuri on
the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the
present Intellectual Property Code and cannot thus be construed as a jurisdictional pronouncement
in cases for violation of intellectual property rights.
The foregoing ruling is the law of the case and thus lays to rest the issue posed by petitioner. We
see no reason in this case to deviate therefrom. It is a basic legal principle that whatever is once
irrevocably established as the controlling legal rule or decision between the same parties in the case
continues to be the law of the case, whether correct on general principles or not, so long as the facts
on which such decision was predicated continue to be the facts of the case before the court.13
IN VIEW WHEREOF, the petition is DISMISSED. The temporary restraining order issued by this
Court on February 18, 2004 is hereby LIFTED.
SO ORDERED.
Austria-Martinez, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

G.R. No. 148222

August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,

vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, Respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl &
Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision1 of the Court of Appeals reversing the
October 31, 1996 decision2of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI)
liable for infringement of trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was
able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The
application for registration of the trademark was filed with the Bureau of Patents, Trademarks and
Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per
Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under
construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl
and Dean agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo Vergara,
submitted for signature the contracts covering SM Cubao and SM Makati to SMIs Advertising
Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes was not only for its SM
Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it
was rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply
dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis.
In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct light boxes for Shoemarts chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for
SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991.
These were delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were
installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean
found out that aside from the two (2) reported SM branches, light boxes similar to those it
manufactures were also installed in two (2) other SM stores. It further discovered that defendantappellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising space in lighted display units located in SMIs
different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and
NEMI enjoining them to cease using the subject light boxes and to remove the same from SMIs
establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light
boxes and NEMI took down its advertisements for "Poster Ads" from the lighted display units in
SMIs stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed
this instant case for infringement of trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster
panels using commonly known techniques and available technology, without notice of or reference
to Pearl and Deans copyright. SMI noted that the registration of the mark "Poster Ads" was only for
stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such,
registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs
prayed for in its complaint since its advertising display units contained no copyright notice, in
violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it
and that the suit was purely intended to malign SMIs good name. On this basis, SMI, aside from
praying for the dismissal of the case, also counterclaimed for moral, actual and exemplary damages
and for the cancellation of Pearl and Deans Certification of Copyright Registration No. PD-R-2558
dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12,
1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor
having engaged in the business of advertising. It repleaded SMIs averments, admissions and
denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of
RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringement of plaintiffs copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which
were fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark
"Poster Ads", for destruction; and

(4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its
trademark "Poster Ads".
Defendants counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a
copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted
were the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like
plaintiff-appellants will not extend to the actual object. It has so been held under jurisprudence, of
which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained
a copyright protection for a book entitled "Seldens Condensed Ledger or Bookkeeping Simplified"
which purported to explain a new system of bookkeeping. Included as part of the book were blank
forms and illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire operation of a day
or a week or a month on a single page, or on two pages following each other. The defendant Baker
then produced forms which were similar to the forms illustrated in Seldens copyrighted books. The
Court held that exclusivity to the actual forms is not extended by a copyright. The reason was that "to
grant a monopoly in the underlying art when no examination of its novelty has ever been made
would be a surprise and a fraud upon the public; that is the province of letters patent, not of
copyright." And that is precisely the point. No doubt aware that its alleged original design would
never pass the rigorous examination of a patent application, plaintiff-appellant fought to foist a
fraudulent monopoly on the public by conveniently resorting to a copyright registration which merely
employs a recordal system without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43
F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished
drawing entitled "Bridge Approach the drawing showed a novel bridge approach to unsnarl traffic
congestion". The defendant constructed a bridge approach which was alleged to be an infringement
of the new design illustrated in plaintiffs drawings. In this case it was held that protection of the
drawing does not extend to the unauthorized duplication of the object drawn because copyright
extends only to the description or expression of the object and not to the object itself. It does not
prevent one from using the drawings to construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without
being authorized, uses a copyrighted architectural plan to construct a structure. This is because the
copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical
drawings of the latters advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that
the protective mantle of the Trademark Law extends only to the goods used by the first user as

specified in the certificate of registration, following the clear mandate conveyed by Section 20 of
Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a
mark or trade-name shall be prima facie evidence of the validity of the registration, the registrants
ownership of the mark or trade-name, and of the registrants exclusive right to use the same in
connection with the goods, business or services specified in the certificate, subject to any conditions
and limitations stated therein." (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Transfer. Said
trademark was recorded in the Principal Register on September 12, 1988 under Registration No.
41165 covering the following products: stationeries such as letterheads, envelopes and calling cards
and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the
defendants-appellants for their use of the words "Poster Ads", in the advertising display units in suit.
Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit permission to a
manufacturer to venture into the production of goods and allow that producer to appropriate the
brand name of the senior registrant on goods other than those stated in the certificate of
registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it
stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and
all goods which his mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Deans registered trademark and
defendants-appellants "Poster Ads" design, as well as the parallel use by which said words were
used in the parties respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its
stationeries, in contrast to defendants-appellants who used the same words in their advertising
display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond
us. But, having already done so, it must stand by the consequence of the registration which it had
caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a
simple contraction of the generic term poster advertising. In the absence of any convincing proof that
"Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that Pearl and Deans
exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of registration,
namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".
There being no finding of either copyright or trademark infringement on the part of SMI and NEMI,
the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and
another is rendered DISMISSING the complaint and counterclaims in the above-entitled case for
lack of merit.5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following
errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO
INFRINGEMENT OF PEARL & DEANS TRADEMARK "POSTER ADS" WAS COMMITTED
BY RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF
THE TRIAL COURT, DESPITE THE LATTERS FINDING, NOT DISPUTED BY THE
HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS
NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS
SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY
DAMAGES, ATTORNEYS FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper perspective
four main concerns of intellectual property law patents, copyrights, trademarks and unfair
competition arising from infringement of any of the first three. We shall focus then on the following
issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library, is
the light box depicted in such engineering drawings ipso facto also protected by such
copyright?
(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office)
in addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark
if it is a mere abbreviation of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when SMI
had the units manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously,
petitioners position was premised on its belief that its copyright over the engineering drawings
extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was
no copyright infringement, the Court of Appeals held that the copyright was limited to the drawings
alone and not to the light box itself. We agree with the appellate court.

First, petitioners application for a copyright certificate as well as Copyright Certificate No. PDR2588 issued by the National Library on January 20, 1981 clearly stated that it was for a class
"O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then
prevailing. Said Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to
any of the following works:
xxx

xxx

xxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx

xxx

xxx

Although petitioners copyright certificate was entitled "Advertising Display Units" (which depicted the
box-type electrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the
rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the statute.7 Accordingly, it
can cover only the works falling within the statutory enumeration or description.8
P & D secured its copyright under the classification class "O" work. This being so, petitioners
copyright protection extended only to the technical drawings and not to the light box itself because
the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags
and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the
same could have referred only to the technical drawings within the category of "pictorial illustrations."
It could not have possibly stretched out to include the underlying light box. The strict application9 of
the laws enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is,
even if its copyright certificate was entitled "Advertising Display Units." What the law does not
include, it excludes, and for the good reason: the light box was not a literary or artistic piece which
could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory
authority to make the light box copyrightable be remedied by the simplistic act of entitling the
copyright certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without license
from P & D, then no doubt they would have been guilty of copyright infringement. But this was not
the case. SMIs and NEMIs acts complained of by P & D were to have units similar or identical to
the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow
Advertising, for leasing out to different advertisers. Was this an infringement of petitioners copyright
over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary not
an artistic work but an "engineering or marketing invention."10 Obviously, there appeared to be some
confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and
trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights
are completely distinct and separate from one another, and the protection afforded by one cannot be
used interchangeably to cover items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or

marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary
and artistic works which are original intellectual creations in the literary and artistic domain protected
from the moment of their creation. Patentable inventions, on the other hand, refer to any technical
solution of a problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & Ds copyright over itstechnical drawings of the said light boxes, should they be
liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we
held that "there can be no infringement of a patent until a patent has been issued, since whatever
right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n
inventor has no common law right to a monopoly of his invention. He has the right to make use of
and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is
free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all
others. As a patentee, he has the exclusive right of making, selling or using the invention.13 On the
assumption that petitioners advertising units were patentable inventions, petitioner revealed them
fully to the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the invention, a
patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is
to bring new designs and technologies into the public domain through disclosure.14 Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation without
significant restraint.15
On one side of the coin is the public which will benefit from new ideas; on the other are the inventors
who must be protected. As held in Bauer & Cie vs. ODonnel,16 "The act secured to the inventor the
exclusive right to make use, and vend the thing patented, and consequently to prevent others from
exercising like privileges without the consent of the patentee. It was passed for the purpose of
encouraging useful invention and promoting new and useful inventions by the protection and
stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the
exclusive privileges granted the benefit of such inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his invention
secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to
the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but
upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use."17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the public
to practice the invention once the patent expires; third, the stringent requirements for patent
protection seek to ensure that ideas in the public domain remain there for the free use of the
public."18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an indepth investigation is required because "in rewarding a useful invention, the rights and welfare of the
community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise
are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated
lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight
technological advance in art."19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the
effect that a person is claiming the creation of a work. The law confers the copyright from the
moment of creation20 and the copyright certificate is issued upon registration with the National
Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot
exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of
its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office
(IPO) to scrutinize the light boxs eligibility as a patentable invention. The irony here is that, had
petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through
the simplified procedure of copyright-registration with the National Library without undergoing the
rigor of defending the patentability of its invention before the IPO and the public the petitioner
would be protected for 50 years. This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held the
copyright of a book which expounded on a new accounting system he had developed. The
publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced
forms similar to those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled
that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x. But
there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly any argument to support it.
The same distinction may be predicated of every other art as well as that of bookkeeping. A treatise
on the composition and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or
on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright;
but no one would contend that the copyright of the treatise would give the exclusive right to the art or
manufacture described therein. The copyright of the book, if not pirated from other works, would be
valid without regard to the novelty or want of novelty of its subject matter. The novelty of the art or
thing described or explained has nothing to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described therein, when no examination of
its novelty has ever been officially made, would be asurprise and a fraud upon the public.
That is the province of letters patent, not of copyright. The claim to an invention of discovery

of an art or manufacture must be subjected to the examination of the Patent Office before an
exclusive right therein can be obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by reference
to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of
great value in the healing art. If the discoverer writes and publishes a book on the subject (as
regular physicians generally do), he gains no exclusive right to the manufacture and sale of
the medicine; he gives that to the public. If he desires to acquire such exclusive right, he
must obtain a patent for the mixture as a new art, manufacture or composition of matter. He
may copyright his book, if he pleases; but that only secures to him the exclusive right of
printing and publishing his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never have
been known or used before. By publishing the book without getting a patent for the art, the latter is
given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book
intended to convey instruction in the art, any person may practice and use the art itself which he has
described and illustrated therein. The use of the art is a totally different thing from a publication
of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive
right to make, sell and use account books prepared upon the plan set forth in such book. Whether
the art might or might not have been patented, is a question, which is not before us. It was not
patented, and is open and free to the use of the public. And, of course, in using the art, the ruled
lines and headings of accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a confusion of
ideas produced by the peculiar nature of the art described in the books, which have been made the
subject of copyright. In describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the operator who uses the
art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays
no foundation for an exclusive claim to the art itself. The object of the one is explanation; the
object of the other is use. The former may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioners president
said was a contraction of "poster advertising." P & D was able to secure a trademark certificate for it,
but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards
and newsletters."22 Petitioner admitted it did not commercially engage in or market these goods. On
the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising
spaces thereon, which, however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,23where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate
of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to
use its own symbol only to those goods specified in the certificate, subject to any conditions and
limitations specified in the certificate x x x. One who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others for products which

are of a different description."24 Faberge, Inc. was correct and was in fact recently reiterated
in Canon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use on the light boxes meant that there could not have
been any trademark infringement since registration was an essential element thereof.
1w phi 1

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair competition, a situation which was possible
even if P & D had no registration.26 However, while the petitioners complaint in the RTC also cited
unfair competition, the trial court did not find private respondents liable therefor. Petitioner
did not appeal this particular point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is
applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation
as a trademark or tradename may, by long and exclusive use by a business (such that the name or
phrase becomes associated with the business or product in the mind of the purchasing public), be
entitled to protection against unfair competition.27 In this case, there was no evidence that P & Ds
use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioners
expert witnesses himself had testified that " Poster Ads was too generic a name. So it was difficult
to identify it with any company, honestly speaking."28 This crucial admission by its own expert
witness that "Poster Ads" could not be associated with P & D showed that, in the mind of the public,
the goods and services carrying the trademark "Poster Ads" could not be distinguished from the
goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was
generic and incapable of being used as a trademark because it was used in the field of poster
advertising, the very business engaged in by petitioner. "Secondary meaning" means that a word or
phrase originally incapable of exclusive appropriation with reference to an article in the market
(because it is geographically or otherwise descriptive) might nevertheless have been used for so
long and so exclusively by one producer with reference to his article that, in the trade and to that
branch of the purchasing public, the word or phrase has come to mean that the article was his
property.29 The admission by petitioners own expert witness that he himself could not associate
"Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of
this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the
Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May
22, 2001 is AFFIRMED in toto.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

G.R. L-45101 November 28, 1986

ROSARIO C. MAGUAN (formerly ROSARIO C. TAN), petitioner,
vs.
THE HONORABLE COURT OF APPEALS and SUSANA LUCHAN, respondents.
Ambrosio Padilla Law Offices for petitioner.

PARAS, J.:p
Submitted on December 9, 1977 for Our decision is this petition for review on certiorari of the
two Resolutions of the Court of Appeals, the first dated July 6, 1976, setting aside its
Decision of February 16, 1976 in CA-G.R. No. SP-04706, titled "SUSANA LUCHAN v. Hon.
HONRADO, et al." wherein it ruled for the dismissal of the petition for lack of merit and at the
same time nullifying the writ of preliminary injunction it had previously issued; and the
second, dated November 4, 1976, denying the motion for reconsideration of the first
resolution above-mentioned.
Petitioner is doing business under the firm name and style of SWAN MANUFACTURING"
while private respondent is likewise doing business under the firm name and style of
"SUSANA LUCHAN POWDER PUFF MANUFACTURING."
It is undisputed that petitioner is a patent holder of powder puff namely:
1. UM-423 (extended and/or renewed under Extension No. UM109 for a period of 5 years from October 6, 1971)
2. UM-450 (extended and/or renewed under Extension No. UM110
for a period of 5 years from January 26, 1972)
3. UM 1184, for a period of 5years fromApril 5, 1974.(Petition,
Rollo, pp. 6-7).
In a letter dated July 10, 1974 (Annex "D", Rollo, p. 86), petitioner informed private
respondent that the powder puffs the latter is manufacturing and selling to various
enterprises particularly those in the cosmetics industry, resemble Identical or substantially
Identical powder puffs of which the former is a patent holder under Registration Certification
Nos. Extension UM-109, Extension UM-110 and Utility Model No. 1184; petitioner explained
such production and sale constitute infringement of said patents and therefore its immediate
discontinuance is demanded, otherwise it will be compelled to take judicial action. (Rollo, pp.
7-8).
Private respondent replied stating that her products are different and countered that
petitioner's patents are void because the utility models applied for were not new and
patentable and the person to whom the patents were issued was not the true and actual
author nor were her rights derived from such author. (Taken from allegations in the Answer,
par. 4, Rollo, p. 93). And on July 25, 1974, private respondent assailed the validity of the

patents involved and filed with the Philippine Patent Office petitions for cancellation of (1)
Utility Model Letter Patent Extension No. UM-109 (Inter Partes Case No. 838, Susana Luchan
v. Rosario C. Tan), (2) Utility Model Letters Patent No. UM-1184 (Inter Partes Case No. 839,
Susana Luchan v. Rosario C. Tan), (3) Utility Model Letters Patent Extension No. UM-110
(Inter Partes Case No. 840, Susana Luchan v. Rosario C. Tan. (Taken from allegations in the
Answer, par. 10, Rollo, pp. 94-95).
In view thereof, petitioner, on August 24, 1974, filed a complaint for damages with injunction
and preliminary injunction against private respondent with the then Court of First Instance of
Rizal, Pasig Branch, docketed as Civil Case No. 19908, for infringing the aforesaid letters
patent, and prayed, among others, that a writ of preliminary injunction be immediately issued
(Complaint, Rollo, p. 90).
In her answer, private respondent alleged that the products she is manufacturing and offering
for sale are not Identical, or even only substantially Identical to the products covered by
petitioner's patents and, by way of affirmative defenses, further alleged that petitioner's
patents in question are void on the following grounds:
(1) at the time of filing of application for the patents involved, the
utility models applied for were not new and patentable under
Sec. 55 of R.A. 165, as amended by R.A. 864; and
(2) the person to whom the patents were issued was not the true
and actual author of the utility models applied for, and neither
did she derive her rights from any true and actual author of
these utility models.
for the following reasons:
(a) since years prior to the filing of applications for the patents
involved, powder puffs of the kind applied for were then already
existing and publicly being sold in the market; both in the
Philippines and abroad; and
(b) applicant's claims in her applications, of "construction" or
process of manufacturing the utility models applied for, with
respect to UM-423 and UM-450, were but a complicated and
impractical version of an old, simple one which has been well
known to the cosmetics industry since years previous to her
filing of applications, and which belonged to no one except to
the general public; and with respect to UM1184; her claim in her
application of a unitary powder puff, was but an limitation of a
product well known to the cosmetics industry since years
previous to her firing of application, and which belonged to no
one except to the general public; (Answer, Rollo, pp. 93-94).
On September 18, 1974, the trial court issued an Order (Annex "K", Rollo, p. 125) granting the
preliminary injunction prayed for by petitioner. Consequently, the corresponding writ was
subsequently issued (Annex "K-1", Rollo, p. 131) enjoining the herein private respondent
(then defendant) and all other persons employed by her, her agents, servants and employees
from directly or indirectly manufacturing, making or causing to be made, selling or causing to
be sold, or using or causing to be used in accordance with, or embodying the utility models

of the Philippine Patent Office Utility Model Letters Patent Nos. 423 (Extension No. UM-109),
No. 450 (Extension No. UM-110), and Utility Model No. 1184 or from infringement upon or
violating said letters patent in any way whatsoever (Annex " K-1 ", Rollo, p. 131).
Private respondent questioned the propriety of the trial court's issuance of the Writ of
Preliminary Injunction arguing that since there is still a pending cancellation proceedings
before the Philippine Patent Office concerning petitioner's patents, such cannot be the basis
for preliminary injunction (Motion for Reconsideration, Rollo, p. 132).
In an Order dated September 11, 1975, the trial court denied private respondent's motion for
reconsideration (Annex "N", Rollo, p. 142).
In challenging these Orders private respondent filed a petition for certiorari with the
respondent court on September 29, 1975 (Annex "D", Rollo, pp. 148-171) reiterating among
other things the invalidity of petitioner's patents and prayed that the trial court be restrained
from enforcing or continuing to enforce the following:
(1) Order dated September 18, 1974, granting the preliminary
injunction;
(2) Writ of preliminary injunction dated September 18, 1974; and
(3) Order dated September 11, 1974 denying petitioner's motion
petition for reconsideration.
On October 15, 1975, the Writ of Preliminary Injunction was issued by the respondent Court
of Appeals as follows:
NOW, THEREFORE, you, respondents, and/or any person/persons acting on
your stead, are hereby ENJOINED to RESTRAIN from enforcing or continuing
to enforce, the proceedings complained of in the petition to wit: 1) Order dated
September 18, 1974, granting the preliminary injunction; 2) Writ of Preliminary
Injunction dated September 18, 1974; and Order dated September 11, 1975,
denying petitioner's motion for reconsideration, all issued in connection with
Civil Case No. 19908, UNTIL FURTHER ORDERS FROM THIS COURT. (Annex
"P", Rollo, p. 1.73)
On February 16, 1976, respondent court promulgated a decision the dispositive portion of
which reads:
WHEREFORE, finding no merit in the herein petition, the same is hereby
dismissed and the preliminary injunction previously issued by this Court is
hereby set aside, with costs.
SO ORDERED. (CA Decision, Rollo, p. 189).
ln said decision respondent court stated that in disposing of the petition it tackled only the
issue of whether the court a quo acted with grave abuse of discretion in issuing the
challenged orders. It made clear the question of whether the patents have been infringed or
not was not determined considering the court a quo has yet to decide the case on the merits
(Ibid., p. 186).

Feeling aggrieved, private respondent moved to reconsider the afore-mentioned Decision

based on the following grounds:
I
THAT THIS HONORABLE COURT ERRED IN NOT
APPRECIATING THE EXISTENCE OF A FAIR QUESTION OF
INVALIDITY OF PRIVATE RESPONDENT'S PATENTS.
II
THAT THIS HONORABLE COURT ERRED IN NOT REJECTING
THE THEORY OF RESPONDENT JUDGE THAT HE HAS NO
JURISDICTION TO INVALIDATE THE PATENTS UPON GROUND
OF LACK OF NOVELTY OF THE PRODUCTS PATENTED. (Motion
for Reconsideration, Rollo, p. 190).
Reviewing on reconsideration, respondent court gave weight to private respondent's
allegation that the latter's products are not identical or even only substantially identical to the
products covered by petitioner's patents. Said court noticed that contrary to the lower courts
position that the court a quohad no jurisdiction to determine the question of invalidity of the
patents, Section 45 and 46 of the Patent Law allow the court to make a finding on the validity
or invalidity of patents and in the event there exists a fair question of its invalidity, the
situation calls for a denial of the writ of preliminary injunction pending the evaluation of the
evidence presented (Rollo, pp. 218-226). Thus, finding the lower court's position to have been
opposed to Patent Law, respondent court considered it a grave abuse of discretion when the
court a quo issued the writ being questioned without looking into the defenses alleged by
herein private respondent. Further, it considered the remedy of appeal, under the
circumstances, to be inadequate.
Thus, on July 6, 1976, respondent court made a complete turnabout from its original decision
and promulgated a Resolution, the dispositive portion of which reads:
WHEREFORE, our decision is hereby set aside. The writ of certiorari is ordered
issued. Accordingly, the challenged orders, Exhibit H and H-1 and the order
denying the motion for reconsideration (Annex "K", Petition), are hereby set
aside. The writ of preliminary injunction previously ordered by this Court and
ordered lifted by the Decision now being set aside is hereby reinstated and
made permanent. Without pronouncement as to costs.
SO ORDERED. (CA Resolution, Rollo, p. 226).
In a Resolution dated November 4, 1976, respondent court, not persuaded by the grounds
embodied in the motion for reconsideration filed by herein petitioner (Annex "V ", Rollo, p.
227), denied the same for lack of merit, thereby maintaining the same stand it took in its July
6, 1976 Resolution (Rollo, p. 281). Hence, this petition.
On December 3, 1976, without giving due course to the petition, this Court required
respondent to file her Comment (Rollo, p. 290) which was filed on December 16, 1976 (Rollo,
pp. 291-316). Thereafter, petitioner filed her Reply (Rollo, p. 323) and on May 30, 1977, the
petition was given due course (Rollo, p. 345). Petitioner filed her brief on July 14, 1977 (Rollo,
p. 351) while private respondent filed her brief on August 25, 1977 (Rollo, p. 359). Thereafter,

petitioner having failed to file reply brief, the Court resolved to declare the case submitted for
decision on December 9, 1977 (Rollo, p. 359).
The assignment of errors raised by the petitioner in this case (Rollo, pp. 15-16) may be
reduced to three main issues:
(1) Whether or not in an action for infringement the Court a
quo had jurisdiction to determine the invalidity of the patents at
issue which invalidity was still pending consideration in the
patent office.
(2) Whether or not the Court a quo committed grave abuse of
discretion in the issuance of a writ of preliminary injunction.
(3) Whether or not certiorari is the proper remedy.
The first issue has been laid to rest in a number of cases where the Court ruled that "When a
patent is sought to be enforced, the questions of invention, novelty or prior use, and each of
them, are open to judicial examination." (Vargas v. F.M. Yaptico & Co. 40 Phil. 199 [1919];
Vargas v. Chua, 57 Phil. 790-791 [1933]; Frank and Gohn v. Kosuyana 59 Phil. 207 [1933]).
Under the present Patent Law, there is even less reason to doubt that the trial court has
jurisdiction to declare the patents in question invalid. A patentee shall have the exclusive
right to make, use and sell the patented article or product and the making, using, or selling by
any person without the authorization of the patentee constitutes infringement of the patent
(Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action
before the proper CFI now (RTC) and to secure an injunction for the protection of his rights
(Sec. 42, R.A. 165). Defenses in an action for infringement are provided for in Section 45 of
the same law which in fact were availed of by private respondent in this case. Then, as
correctly stated by respondent Court of Appeals, this conclusion is reinforced by Sec. 46 of
the same law which provides that if the Court shall find the patent or any claim thereof
invalid, the Director shall on certification of the final judgment ... issue an order cancelling
the patent or the claims found invalid and shall publish a notice thereof in the Official
Gazette." Upon such certification, it is ministerial on the part of the patent office to execute
the judgment. (Rollo, pp. 221-222).
II.
The burden of proof to substantiate a charge of infringement is with the plaintiff. But where
the plaintiff introduces the patent in evidence, and the same is in due form, there is created
a prima faciepresumption of its correctness and validity. The decision of the Commissioner
(now Director) of Patent in granting the patent is presumed to be correct. The burden of going
forward with the evidence (burden of evidence) then shifts to the defendant to overcome by
competent evidence this legal presumption.
The question then in the instant case is whether or not the evidence introduced by private
respondent herein is sufficient to overcome said presumption.
After a careful review of the evidence consisting of 64 exhibits and oral testimonies of five
witnesses presented by private respondents before the Court of First Instance before the
Order of preliminary injunction was issued as well as those presented by the petitioner,
respondent Court of Appeals was satisfied that there is a prima facie showing of a fair

question of invalidity of petitioner's patents on the ground of lack of novelty. As pointed out
by said appellate court said evidence appeared not to have been considered at all by the
court a quo for alleged lack of jurisdiction, on the mistaken notion that such question in
within the exclusive jurisdiction of the patent office.
It has been repeatedly held that an invention must possess the essential elements of novelty ,
originality and precedence and for the patentee to be entitled to protection, the invention
must be new to the world. Accordingly, a single instance of public use of the invention by a
patentee for more than two years (now for more than one year only under Sec. 9 of the Patent
Law) before the date of his application for his patent, will be fatal to, the validity of the patent
when issued. (Frank, et al. v. Kosuyama Vargas v. F.M. Yaptico & Co. and Vargas v. Chua, et
al., supra).
The law provides:
SEC. 9. Invention not considered new or patentable. An invention shall not
be considered new or capable of being patented if it was known or used by
others in the Philippines before the invention thereof by the inventor named in
an application for patent for the invention; or if it was patented or described in
any printed publication in the Philippines or any foreign country more than one
year before the application for a patent therefor; or if it had been in public use
or on sale in the Philippines for more than one year before the application for a
patent therefor; or if it is the subject matter of a validity issued patent in the
Philippines granted on an application filed before the filing of the application
for patent therefor.
Thus, more specifically, under American Law from which our Patent Law was derived (Vargas
v. F.M. Yaptico & Co. supra) it is generally held that in patent cases a preliminary injunction
will not issue for patent infringement unless the validity of the patent is clear and beyond
question. The issuance of letters patent, standing alone, is not sufficient to support such
drastic relief (8 Deller's Walker on Patents p. 406). In cases of infringement of patent no
preliminary injunction will be granted unless the patent is valid and infringed beyond
question and the record conclusively proves the defense is sham. (Ibid., p. 402)
In the same manner, under our jurisprudence, as a general rule because of the injurious
consequences a writ of injunction may bring, the right to the relief demanded must be clear
and unmistakable. (Sangki v. Comelec, 21 SCRA 1392; December 26, 1967) and the
dissolution of the writ is proper where applicant has doubtful title to the disputed property.
(Ramos v. C.A., 95 SCRA 359).
III.
It will be noted that the validity of petitioner's patents is in question for want of novelty.
Private respondent contends that powder puffs Identical in appearance with that covered by
petitioner's patents existed and were publicly known and used as early as 1963 long before
petitioner was issued the patents in question. (List of Exhibits, Rollo, pp. 194-199). As
correctly observed by respondent Court of Appeals, "since sufficient proofs have been
introduced in evidence showing a fair question of the invalidity of the patents issued for such
models, it is but right that the evidence be looked into, evaluated and determined on the
merits so that the matter of whether the patents issued were in fact valid or not may be
resolved." (Rollo, pp. 286-287).

All these notwithstanding, the trial court nonetheless issued the writ of preliminary injunction
which under the circumstances should be denied.
For failure to determine first the validity of the patents before aforesaid issuance of the writ,
the trial court failed to satisfy the two requisites necessary if an injunction is to issue,
namely: the existence of the right to be protected and the violation of said right. (Buayan
Cattle Co., Inc. v. Quintillan, 128 SCRA 276).
Under the above established principles, it appears obvious that the trial court committed a
grave abuse of discretion which makes certiorari the appropriate remedy.
As found by respondent Court of Appeals, the injunctive order of the trial court is of so
general a tenor that petitioner may be totally barred from the sale of any kind of powder puff.
Under the circumstances, respondent appellate court is of the view that ordinary appeal is
obviously inadequate. (Rollo, p. 288). A parallel was drawn from a decision of the Supreme
Court in the case of Sanchez v. Hon. Court of Appeals, 69 SCRA 328 [1976] where the First
Division of the Supreme Court ruled that "The prerogative writ of certiorari may be applied for
by proper petition notwithstanding the existence of the regular remedy of an appeal in due
cause when among other reasons, the broader interests of justice so require or an ordinary
appeal is not an adequate remedy."
Private respondent maintains the position that the resolutions sought to be appealed from
had long become final and executory for failure of Hon. Reynaldo P. Honrado, the trial court
judge, to appeal by certiorari from the resolutions of respondent Court of Appeals. (Rollo, pp.
291-292).
Such contention is untenable.
There is no dispute that petitioner has seasonably petitioned. On the other hand, it is
elementary that the trial judge is a mere nominal party as clearly provided in Section 5, Rule
65 of the Revised Rules of Court where it shall be the duty of such person or persons
interested in sustaining the proceedings in court, "to appear and defend, both in his or their
own behalf and in behalf of the court or judge affected by the proceedings."
Relative thereto "the judge whose order is under attack is merely a nominal party; wherefore,
a judge in his official capacity should not be made to appear as a party seeking reversal of a
decision that is unfavorable to the action taken by him." (Hon. Alcasid v. Samson, 102 Phil.
735-736; Tarona v. Sayo, 67 SCRA 508, 524; Lim Se v. Argel, 70 SCRA 378).
As to petitioner's claim of prescription, private respondent's contention that such refers to
the filing of petitions for cancellation in the Patent Office under Sec. 28 of the Patent Law and
not to a defense against an action for infringement under Sec. 45 thereof which may be raised
anytime, is evident under aforesaid law.
PREMISES CONSIDERED, the assailed resolutions of the Court of Appeals are hereby
AFFIRMED.
SO ORDERED.
Feria (Chairman), Fernan, Gutierrez, Jr., and Feliciano, * JJ., concur.

Alampay, J., took no part.

G.R. No. L-32160 January 30, 1982

DOMICIANO A. AGUAS, petitioner,
vs.
CONRADO G. DE LEON and COURT OF APPEALS, respondents.

FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals in CA G.R. NO. 37824-R
entitled "Conrado G. de Leon, plaintiff-appelle vs. Dominciano Aguas and F.H. Aquino and Sons,
defendants-appellants," the dispositive portion of which reads:
WHEREFORE, with the modification that plintiff-applee's award of moral damages is
hereby redured to P3,000.00, the appealed judgment is hereby affirmed, in all othe
respects, with costs against appellants. 1
On April 14, 1962, Conrado G. de Leon filed in the Court of First Instance of Rizal at Quezon City a
complaint for infringement of patent against Domiciano A. Aguas and F. H. Aquino and Sons alleging
that being the original first and sole inventor of certain new and useful improvements in the process
of making mosaic pre-cast tiles, he lawfully filed and prosecuted an application for Philippine patent,
and having complied in all respects with the statute and the rules of the Philippine Patent Office,
Patent No. 658 was lawfully granted and issued to him; that said invention was new, useful, not
known or used by others in this country before his invention thereof, not patented or described in any
printed publication anywhere before his invention thereof, or more than one year prior to his
application for patent thereof, not patented in any foreign country by him or his legal representatives
on application filed more than one year prior to his application in this country; that plaintiff has the
exclusive license to make, use and sell throughout the Philippines the improvements set forth in said
Patent No. 658; that the invention patented by said Patent No. 658 is of great utility and of great
value to plaintiff and of great benefit to the public who has demanded and purchased tiles
embodying the said invention in very large quantities and in very rapidly increasing quant ies; that he
has complied with the Philippine statues relating to marking patented tiles sold by him; that the
public has in general acknowledged the validity of said Patent No. 658, and has respected plaintiff's
right therein and thereunder; that the defendant Domiciano A. Aguas infringed Letters of Patent No.
658 by making, using and selling tiles embodying said patent invention and that defendant F. H.
Aquino & Sons is guilty of infringement by making and furnishing to the defendant Domiciano A.
Aguas the engravings, castings and devices designed and intended of tiles embodying plaintiff;s
patented invention; that he has given direct and personal notice to the defendants of their said acts
of infringement and requested them to desist, but nevertheless, defendants have refused and
neglected to desist and have disregarded such request, and continue to so infringe causing great
and irreparable damage to plaintiff; that if the aforesaid infringement is permitted to continue, further
losses and damages and irreparable injury will be sustained by the plaintiff; that there is an urgent
need for the immediate issuance of a preliminary injunction; that as a result of the defendants'
wrongful conduct, plaintiff has suffered and the defendants are liable to pay him, in addition to actual
damages and loss of profits which would be determined upon proper accounting, moral and
exemplary or corrective damages in the sum of P90,000.00; that plaintiff has been compelled to go

to court for the protection and enforcement of his and to engage the service of counsel, thereby
incurring attorney's fees and expenses of litigation in the sum of P5,000.00. 2
On April 14, 1962, an order granting the plaintiff's petition for a Writ of Preliminary Injunction was
issued. 3
On May 23, 1962, the defendant Domiciano A. Aguas filed his answer denying the allegations of the
plaintiff and alleging that: the plaintiff is neither the original first nor sole inventor of the
improvements in the process of making mosaic pre-cast tiles, the same having been used by several
tile-making factories in the Philippines and abroad years before the alleged invention by de Leon;
that Letters Patent No. 658 was unlawfully acquired by making it appear in the application in relation
thereto that the process is new and that the plaintiff is the owner of the process when in truth and in
fact the process incorporated in the patent application has been known and used in the Philippines
by almost all tile makers long before the alleged use and registration of patent by plaintiff Conrado
G. de Leon; that the registration of the alleged invention did not confer any right on the plaintiff
because the registration was unlawfully secured and was a result of the gross misrepresentation on
the part of the plaintiff that his alleged invention is a new and inventive process; that the allegation of
the plaintiff that Patent No. 658 is of great value to plaintiff and of great benefit to the public is a
mere conclusion of the plaintiff, the truth being that a) the invention of plaintiff is neither inventive nor
new, hence, it is not patentable, b) defendant has been granted valid patents (Patents No. 108, 109,
110 issued on December 21, 1961) on designs for concrete decorative wall tiles; and c) that he can
not be guilty of infringement because his products are different from those of the plaintiff.4
The trial court rendered a decision dated December 29, 1965, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the
defendants:
1. Declaring plaintiff's patent valid and infringed:
2. Granting a perpetual injunction restraining defendants, their officers, agents,
employees, associates, confederates, and any and all persons acting under their
authority from making and/or using and/or vending tiles embodying said patented
invention or adapted to be used in combination embodying the same, and from
making, manufacturing, using or selling, engravings, castings and devises designed
and intended for use in apparatus for the making of tiles embodying plaintiff's
patented invention, and from offering or advertising so to do, and from aiding and
abetting or in any way contributing to the infringement of said patent;
3. Ordering that each and all of the infringing tiles, engravings, castings and devices,
which are in the possession or under the control of defendants be delivered to
plaintiff;
4. Ordering the defendants to jointly and severally pay to the plaintiff the following
sums of money, to wit:
(a) P10,020.99 by way of actual damages;
(b) P50,000.00 by way of moral damages;
(c) P5,000.00 by way of exemplary damages;

(d) P5,000.00 by way of attorney's fees and

(e) costs of suit. 5
The defendant Domiciano Aguas appealed to the Court of Appeals, assigning the following errors. 6
I
THE TRIAL COURT ERRED IN NOT HOLDING THAT PLAINTIFF'S PATENT FOR
THE 'PROCESS OF MAKING MOSAIC PRE-CAST TILE' IS INVALID BECAUSE
SAID ALLEGED PROCESS IS NOT AN INVENTION OR DISCOVERY AS THE
SAME HAS ALREADY LONG BEEN USED BY TILE MANUFACTURERS BOTH
ABROAD AND IN THIS COUNTRY.
II
THE TRIAL COURT ERRED IN HOLDING THAT THE PATENT OF PLAINTIFF IS
VALID BECAUSE IT IS AN IMPROVEMENT OR THE AGE-OLD TILE MAKING
SYSTEM.
III
THE TRIAL COURT ERRED IN NOT ORDERING THE CANCELLATION OF
PLAINTIFF-APPELLEE'S LETTERS PATENT NO. 658, EXHIBIT L, IN
ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE PATENT LAW,
REPUBLIC ACT 165.
IV
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT DOMICIANO A.
AGUAS IS GUILTY OF INFRINGEMENT DESPITE THE FACT THAT PLAINTIFF'S
PATENT IS NOT A VALID ONE.
V
THE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEFENDANT COULD
NEVER BE GUILTY OF INFRINGEMENT OF PLAINTIFF'S PATENT BECAUSE
EVEN IN MATTERS NOT PATENTED BY THE PLAINTIFF - LIKE THE
COMPOSITION AND PROPORTION OF INGREDIENTS USED AND THE
STRUCTURAL DESIGNS OF THE MOULD AND THE TILE PRODUCED - THAT OF
THE DEFENDANT ARE DIFFERENT.
VI
THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT AND IN
HOLDING THE DEFENDANT, INSTEAD OF THE PLAINTIFF, LIABLE FOR
DAMAGES, AND ATTORNEY'S FEES.
On August 5, 1969, the Court of Appeals affirmed the decision of the trial court, with the modification
that plaintiff-appellee's award of moral damages was reduced to P3,000.00. 7

The petitioner assigns the following errors supposedly committed by the Court of Appeals:
It is now respectfully submitted that the Court of Appeals committed the following
errors involving questions of law, to wit:
First error. When it did not conclude that the letters patent of the respondent
although entitled on the cover page as a patent for improvements, was in truth and in
fact, on the basis of the body of the same, a patent for the old and non-patentable
process of making mosaic pre-cast tiles;
Second error. When it did not conclude from the admitted facts of the case,
particularly the contents of the letters patent, Exh. L and the pieces of physical
evidence introduced consisting of samples of the tiles and catalouges, that the
alleged improvements introduced by the respondent in the manufacture of mosaic
pre-cast tiles are not patentable, the same being not new, useful and inventive.
Third error. As a corollary, when it sentenced the herein petitioner to pay the
damages enumerated in the decision of the lower court (Record on Appeal, pp. 7475), as confirmed by it (the Court of Appeals), but with the modification that the
amount of P50,000.00 moral damages was reduced to P3,000.00. 8
The facts, as found by the Court of Appeals, are:
The basic facts borne out by the record are to the effect that on December 1, 1959
plaintiff-appellee filed a patent application with the Philippine Patent Office, and on
May 5, 1960, said office issued in his favor Letters Patent No. 658 for a "new and
useful improvement in the process of making mosaic pre-cast tiles" (Exh, "L"); that
defendant F.H. Aquino & Sons engraved the moulds embodying plaintiff's patented
improvement for the manufacture of pre-cast tiles, plaintiff furnishing said defendant
the actual model of the tiles in escayola and explained to said engraver the plans,
specifications and the details of the engravings as he wanted them to be made,
including an explanation of the lip width, artistic slope of easement and critical depth
of the engraving that plaintiff wanted for his moulds; that engraver Enrique Aquino
knew that the moulds he was engraving for plaintiff were the latter's very own, which
possession the new features and characteristics covered by plaintiff's parent; that
defendant Aguas personally, as a building contractor, purchased from plaintiff, tiles
shaped out of these moulds at the back of which was imprinted plaintiff's patent
number (Exhs., "A" to "E"); that subsequently, through a representative, Mr.
Leonardo, defendant Aguas requested Aquino to make engravings of the same type
and bearing the characteristics of plaintiff's moulds; that Mr. Aquino knew that the
moulds he was asked to engrave for defendant Aguas would be used to produce
cement tiles similar to plaintiff's; that the moulds which F.H. Aquino & Sons
eventually engraved for Aguas and for which it charged Aguas double the rate it
charged plaintiff De Leon, contain the very same characteristic features of plaintiff's
mould and that Aguas used these moulds in the manufacture of his tiles which he
actually put out for sale to the public (Exhs. "1" to "3" and Exhs. "A" to "E"); that both
plaintiff's and defendant Aguas' tiles are sculptured pre-cast wall tiles intended as a
new feature of construction and wag ornamentation substantially Identical to each
other in size, easement, lip width and critical depth of the deepest depression; and
that the only significant difference between plaintiff's mould and that engraved by
Aquino for Aguas is that, whereas plaintiff's mould turns out tiles 4 x 4 inches in size,
defendant Aguas' mould is made to fit a 4-1/4 x 4-1/4 inch tile. 9

The patent right of the private respondent expired on May 5, 1977. 10 The errors will be discuss only to
determine the right of said private respondent to damages.

The petitioner questioned the validity of the patent of the private respondent, Conrado G. de Leon,
on the ground that the process, subject of said patent, is not an invention or discovery, or an
improvement of the old system of making tiles. It should be noted that the private respondent does
not claim to be the discoverer or inventor of the old process of tile-making. He only claims to have
introduced an improvement of said process. In fact, Letters Patent No. 658 was issued by the
Philippine Patent Office to the private respondent, Conrado G. de Leon, to protect his rights as the
inventor of "an alleged new and useful improvement in the process of making mosaic pre-cast
tiles." 11 Indeed, Section 7, Republic Act No. 165, as amended provides: "Any invention of a new and
useful machine, manufactured product or substance, process, or an improvement of the foregoing, shall
be patentable.

The Court of Appeals found that the private respondent has introduced an improvement in the
process of tile-making because:
... we find that plaintiff-appellee has introduced an improvement in the process of tilemaking, which proceeds not merely from mechanical skill, said improvement
consisting among other things, in the new critical depth, lip width, easement and field
of designs of the new tiles. The improved lip width of appellee's tiles ensures the
durability of the finished product preventing the flaking off of the edges. The
easement caused by the inclination of the protrusions of the patented moulds is for
the purpose of facilitating the removal of the newly processed tile from the female
die. Evidently, appellee's improvement consists in the solution to the old critical
problem by making the protrusions on his moulds attain an optimum height, so that
the engraving thereon would be deep enough to produce tiles for sculptured and
decorative purposes, strong optimum thickness of appellee's new tiles of only 1/8 of
an inch at the deepest easement (Exhs. "D" and "D-1") is a most critical feature,
suggestive of discovery and inventiveness, especially considering that, despite said
thinness, the freshly formed tile remains strong enough for its intended purpose.
While it is true that the matter of easement, lip width, depth, protrusions and
depressions are known to some sculptors, still, to be able to produce a new and
useful wall tile, by using them all together, amounts to an invention. More so, if the
totality of all these features are viewed in combination with the Ideal composition of
cement, sodium silicate and screened fine sand.
By using his improved process, plaintiff has succeeded in producing a new product a concrete sculptured tile which could be utilized for walling and decorative purposes.
No proof was adduced to show that any tile of the same kind had been produced by
others before appellee. Moreover, it appears that appellee has been deriving
considerable profit from his manufacture and sale of such tiles. This commercial
success is evidence of patentability (Walker on Patents, Dellers Edition, Vol. I, p.
237). 12
The validily of the patent issued by the Philippines Patent Office in favor of the private respondent
and the question over the inventiveness, novelty and usefulness of the improved process therein
specified and described are matters which are better determined by the Philippines Patent Office.
The technical staff of the Philippines Patent Office, composed of experts in their field, have, by the
issuance of the patent in question, accepted the thinness of the private respondent's new tiles as a

discovery. There is a presumption that the Philippines Patent Office has correctly determined the
patentability of the improvement by the private respondent of the process in question.
Anent this matter, the Court of Appeals said:
Appellant has not adduced evidence sufficient to overcome the above established
legal presumption of validity or to warrant reversal of the findings of the lower court
relative to the validity of the patent in question. In fact, as we have already pointed
out, the clear preponderance of evidence bolsters said presumption of validity of
appellee's patent. There is no indication in the records of this case and this Court is
unaware of any fact, which would tend to show that concrete wall tiles similar to
those produced by appellee had ever been made by others before he started
manufacturing the same. In fact, during the trial, appellant was challenged by
appellee to present a tile of the same kind as those produced by the latter, from any
earlier source but, despite the fact that appellant had every chance to do so, he could
not present any. There is, therefore, no concrete proof that the improved process of
tile-making described in appellee's patent was used by, or known to, others previous
to his discovery thereof. 13
The contention of the petitioner Aguas that the letters patent of de Leon was actually a patent for the
old and non-patentable process of making mosaic pre-cast tiles is devoid of merit. De Leon never
claimed to have invented the process of tile-making. The Claims and Specifications of Patent No.
658 show that although some of the steps or parts of the old process of tile making were described
therein, there were novel and inventive features mentioned in the process. Some of the novel
features of the private respondent's improvements are the following: critical depth, with
corresponding easement and lip width to such degree as leaves the tile as thin as 1/8 of an inch at
its thinnest portion, Ideal composition of cement and fine river sand, among other ingredients that
makes possible the production of tough and durable wall tiles, though thin and light; the engraving of
deep designs in such a way as to make the tiles decorative, artistic and suitable for wall
ornamentation, and the fact that the tiles can be mass produced in commercial quantities and can be
conveniently stock-piled, handled and packed without any intolerable incidence of breakages. 14
The petitioner also contends that the improvement of respondent is not patentable because it is not
new, useful and inventive. This contention is without merit.
The records disclose that de Leon's process is an improvement of the old process of tile making.
The tiles produced from de Leon's process are suitable for construction and ornamentation, which
previously had not been achieved by tiles made out of the old process of tile making. De Leon's
invention has therefore brought about a new and useful kind of tile. The old type of tiles were usually
intended for floors although there is nothing to prevent one from using them for walling purposes.
These tiles are neither artistic nor ornamental. They are heavy and massive.
The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill.
He has introduced a new kind of tile for a new purpose. He has improved the old method of making
tiles and pre-cast articles which were not satisfactory because of an intolerable number of
breakages, especially if deep engravings are made on the tile. He has overcome the problem of
producing decorative tiles with deep engraving, but with sufficient durability. 15 Durability inspite of the
thinness and lightness of the tile, is assured, provided that a certain critical depth is maintained in relation
to the dimensions of the tile. 16

The petitioner also claims that changing the design from embossed to engraved tiles is neither new
nor inventive because the Machuca Tile Factory and the Pomona Tile Manufacturing Company have

been manufacturing decorative wall tiles that are embossed as well as engraved; 17 that these tiles
have also depth, lip width, easement and field of designs;
some designs of Pomona. 19

18

and that the private respondent had copied

The Machuca tiles are different from that of the private respondent. The designs are embossed and
not engraved as claimed by the petitioner. There may be depressions but these depressions are too
shallow to be considered engraved. Besides, the Machuca tiles are heavy and massive.
There is no similarity between the Pomona Tiles and de Leon's tiles. The Pomona tiles are made of
ceramics. 20The process involved in making cement tiles is different from ceramic tiles. Cement tiles are
made with the use of water, while in ceramics fire is used. As regards the allegation of the petitioner that
the private respondent copied some designs of Pomona, suffice it to say that what is in issue here is the
process involved in tile making and not the design.

In view of the foregoing, this Court finds that Patent No. 658 was legally issued, the process and/or
improvement being patentable.
Both the trial court and the Court of Appeals found as a fact that the petitioner Domiciano A. Aguas
did infringe de Leon's patent. There is no showing that this case falls under one of the exceptions
when this Court may overrule the findings of fact of the Court of Appeals. The only issue then to be
resolved is the amount of damages that should be paid by Aguas.
In its decision the Court of Appeals affirmed the amount of damages awarded by the lower court with
the modification that the respondent is only entitled to P3,000.00 moral damages. 21
The lower court awarded the following damages: 22
a) P10,020.99 by way of actual damages;
b) P50,000.00 by way of moral damages;
c) P5,000.00 by way of exemplary damages;
d) P5,000.00 by way of attomey's fees and
e) Costs of suit
because:
An examination of the books of defendant Aguas made before a Commissioner
reveals that during the period that Aguas was manufacturing and selling tiles similar
to plaintiff's, he made a gross income of P3,340.33, which can be safely be
considered the amount by which he enriched himself when he infringed plaintiff's
patent. Under Sec. 42 of the Patent Law any patentee whose rights have been
infringed is entitled to damages which, according to the circumstances of the case
may be in a sum above the amount found as actual damages sustained provided the
award does not exceed three times the amount of such actual damages. Considering
the wantonness of the infringement committed by the defendants who knew all the
time about the existence of plaintiff's patent, the Court feels there is reason to grant
plaintiff maximum damages in the sum of P10,020.99. And in order to discourage
patent infringements and to give more teeth to the provisions of the patent law thus

promoting a stronger public policy committed to afford greater incentives and

protection to inventors, the Court hereby awards plaintiff exemplary damages in the
sum of P5,000.00 to be paid jointly and severally by defendants. Considering the
status of plaintiff as a reputable businessman, and owner of the likewise reputed
House of Pre-Cast, he is entitled to an award of moral damages in the sum of
P50,000.00. 23
In reducing the amount of moral damages the Court of Appeals said:
As regards the question of moral damages it has been shown that as a result of the
unlawful acts of infringment committed by defendants, plaintiff was unstandably very
sad; he worried and became nervous and lost concentration on his work in
connection with his tile business (pp. 28, 30, t.s.n., Feb. 28, 1964). In addition,
plaintiff's character and reputation have been unnecessarily put in question because
defendants, by their acts of infringement have created a doubt or suspicion in the
public mind concerning the truth and honesty of plaintiff's advertisements and public
announcements of his valid patent. Necessarily, said acts of defendants have caused
plaintiff considerable mental suffering, considering especially, the fact that he staked
everything on his pre-cast tile business (p. 36, t.s.n., Id.) The wantonness and
evident bad faith characterizing defendants' prejudicial acts against plaintiff justify the
assessment of moral damages in plaintiff's favor, though we do not believe the
amount of P50,000.00 awarded by the lower court is warranted by the
circumstances. We feel that said amount should be reduced to P3,000.00 by way of
compensating appellee for his moral suffering. "Willful injury to property may be a
legal ground for awarding moral damages if the court should find that, under the
circumstances such damages are justly due" (Art. 2219 NCC).
There is no reason to reduce the amount of damages and attorneys fees awarded by the trial court
as modified by the Court of Appeals.
WHEREFORE, the decision of the Court of Appeals in CA G.R. No. 37824-R appealed from is
hereby affirmed, without pronouncement as to costs.
SO ORDERED.
Makasiar, Guerrero, Melencio-Herrera and Plana, JJ., concur.
Teehankee, J., took no part.

G. R. No. 126627

August 14, 2003

SMITH KLINE BECKMAN CORPORATION, Petitioner,

vs.
THE HONORABLE COURT OF APPEALS and TRYCO PHARMA CORPORATION, Respondents.
DECISION

CARPIO-MORALES, J.:
Smith Kline Beckman Corporation (petitioner), a corporation existing by virtue of the laws of the state
of Pennsylvania, United States of America (U.S.) and licensed to do business in the Philippines, filed
on October 8, 1976, as assignee, before the Philippine Patent Office (now Bureau of Patents,
Trademarks and Technology Transfer) an application for patent over an invention entitled "Methods
and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2Benzimidazole Carbamate." The application bore Serial No. 18989.
On September 24, 1981, Letters Patent No. 145611 for the aforesaid invention was issued to
petitioner for a term of seventeen (17) years.
The letters patent provides in its claims2 that the patented invention consisted of a new compound
named methyl 5 propylthio-2-benzimidazole carbamate and the methods or compositions utilizing
the compound as an active ingredient in fighting infections caused by gastrointestinal parasites and
lungworms in animals such as swine, sheep, cattle, goats, horses, and even pet animals.
Tryco Pharma Corporation (private respondent) is a domestic corporation that manufactures,
distributes and sells veterinary products including Impregon, a drug that has Albendazole for its
active ingredient and is claimed to be effective against gastro-intestinal roundworms, lungworms,
tapeworms and fluke infestation in carabaos, cattle and goats.
Petitioner sued private respondent for infringement of patent and unfair competition before the
Caloocan City Regional Trial Court (RTC).3 It claimed that its patent covers or includes the
substance Albendazole such that private respondent, by manufacturing, selling, using, and causing
to be sold and used the drug Impregon without its authorization, infringed Claims 2, 3, 4, 7, 8 and 9
of Letters Patent No. 145614 as well as committed unfair competition under Article 189, paragraph 1
of the Revised Penal Code and Section 29 of Republic Act No. 166 (The Trademark Law) for
advertising and selling as its own the drug Impregon although the same contained petitioners
patented Albendazole.5
On motion of petitioner, Branch 125 of the Caloocan RTC issued a temporary restraining order
against private respondent enjoining it from committing acts of patent infringement and unfair
competition.6 A writ of preliminary injunction was subsequently issued.7
Private respondent in its Answer8 averred that Letters Patent No. 14561 does not cover the
substance Albendazole for nowhere in it does that word appear; that even if the patent were to
include Albendazole, such substance is unpatentable; that the Bureau of Food and Drugs allowed it
to manufacture and market Impregon with Albendazole as its known ingredient; that there is no proof
that it passed off in any way its veterinary products as those of petitioner; that Letters Patent No.
14561 is null and void, the application for the issuance thereof having been filed beyond the one
year period from the filing of an application abroad for the same invention covered thereby, in
violation of Section 15 of Republic Act No. 165 (The Patent Law); and that petitioner is not the
registered patent holder.
Private respondent lodged a Counterclaim against petitioner for such amount of actual damages as
may be proven; P1,000,000.00 in moral damages; P300,000.00 in exemplary damages;
and P150,000.00 in attorneys fees.
Finding for private respondent, the trial court rendered a Decision dated July 23, 1991,9 the
dispositive portion of which reads:

WHEREFORE, in view of the foregoing, plaintiffs complaint should be, as it is hereby, DISMISSED.
The Writ of injunction issued in connection with the case is hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office is hereby declared null
and void for being in violation of Sections 7, 9 and 15 of the Patents Law.
Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is hereby directed
to cancel Letters Patent No. 14561 issued to the plaintiff and to publish such cancellation in the
Official Gazette.
Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual damages and
P100,000.00 attorneys fees as prayed for in its counterclaim but said amount awarded to defendant
is subject to the lien on correct payment of filing fees.
SO ORDERED. (Underscoring supplied)
On appeal, the Court of Appeals, by Decision of April 21, 1995,10 upheld the trial courts finding that
private respondent was not liable for any infringement of the patent of petitioner in light of the latters
failure to show that Albendazole is the same as the compound subject of Letters Patent No. 14561.
Noting petitioners admission of the issuance by the U.S. of a patent for Albendazole in the name of
Smith Kline and French Laboratories which was petitioners former corporate name, the appellate
court considered the U.S. patent as implying that Albendazole is different from methyl 5 propylthio-2benzimidazole carbamate. It likewise found that private respondent was not guilty of deceiving the
public by misrepresenting that Impregon is its product.
The appellate court, however, declared that Letters Patent No. 14561 was not void as it sustained
petitioners explanation that Patent Application Serial No. 18989 which was filed on October 8, 1976
was a divisional application of Patent Application Serial No. 17280 filed on June 17, 1975 with the
Philippine Patent Office, well within one year from petitioners filing on June 19, 1974 of its Foreign
Application Priority Data No. 480,646 in the U.S. covering the same compound subject of Patent
Application Serial No. 17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus ruled that Patent Application Serial
No. 18989 was deemed filed on June 17, 1995 or still within one year from the filing of a patent
application abroad in compliance with the one-year rule under Section 15 of the Patent Law. And it
rejected the submission that the compound in Letters Patent No. 14561 was not patentable, citing
the jurisprudentially established presumption that the Patent Offices determination of patentability is
correct. Finally, it ruled that petitioner established itself to be the one and the same assignee of the
patent notwithstanding changes in its corporate name. Thus the appellate court disposed:
WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that the orders
for the nullification of Letters Patent No. 14561 and for its cancellation are deleted therefrom.
SO ORDERED.
Petitioners motion for reconsideration of the Court of Appeals decision having been denied11 the
present petition for review on certiorari12 was filed, assigning as errors the following:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT ALBENDAZOLE,
THE ACTIVE INGREDIENT IN TRYCOS "IMPREGON" DRUG, IS INCLUDED IN

PETITIONERS LETTERS PATENT NO. 14561, AND THAT CONSEQUENTLY TRYCO IS

ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING TO PRIVATE
RESPONDENT TRYCO PHARMA CORPORATION P330,000.00 ACTUAL DAMAGES AND
P100,000.00 ATTORNEYS FEES.
Petitioner argues that under the doctrine of equivalents for determining patent infringement,
Albendazole, the active ingredient it alleges was appropriated by private respondent for its drug
Impregon, is substantially the same as methyl 5 propylthio-2-benzimidazole carbamate covered by
its patent since both of them are meant to combat worm or parasite infestation in animals. It cites the
"unrebutted" testimony of its witness Dr. Godofredo C. Orinion (Dr. Orinion) that the chemical
formula in Letters Patent No. 14561 refers to the compound Albendazole. Petitioner adds that the
two substances substantially do the same function in substantially the same way to achieve the
same results, thereby making them truly identical. Petitioner thus submits that the appellate court
should have gone beyond the literal wordings used in Letters Patent No. 14561, beyond merely
applying the literal infringement test, for in spite of the fact that the word Albendazole does not
appear in petitioners letters patent, it has ably shown by evidence its sameness with methyl 5
propylthio-2-benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine Patent Office on account of which
it was granted Letters Patent No. 14561 was merely a divisional application of a prior application in
the U. S. which granted a patent for Albendazole. Hence, petitioner concludes that both methyl 5
propylthio-2-benzimidazole carbamate and the U.S.-patented Albendazole are dependent on each
other and mutually contribute to produce a single result, thereby making Albendazole as much a part
of Letters Patent No. 14561 as the other substance is.
Petitioner concedes in its Sur-Rejoinder13 that although methyl 5 propylthio-2-benzimidazole
carbamate is not identical with Albendazole, the former is an improvement or improved version of
the latter thereby making both substances still substantially the same.
With respect to the award of actual damages in favor of private respondent in the amount
of P330,000.00 representing lost profits, petitioner assails the same as highly speculative and
conjectural, hence, without basis. It assails too the award of P100,000.00 in attorneys fees as not
falling under any of the instances enumerated by law where recovery of attorneys fees is allowed.
In its Comment,14 private respondent contends that application of the doctrine of equivalents would
not alter the outcome of the case, Albendazole and methyl 5 propylthio-2-benzimidazole carbamate
being two different compounds with different chemical and physical properties. It stresses that the
existence of a separate U.S. patent for Albendazole indicates that the same and the compound in
Letters Patent No. 14561 are different from each other; and that since it was on account of a
divisional application that the patent for methyl 5 propylthio-2-benzimidazole carbamate was issued,
then, by definition of a divisional application, such a compound is just one of several independent
inventions alongside Albendazole under petitioners original patent application.
As has repeatedly been held, only questions of law may be raised in a petition for review on
certiorari before this Court. Unless the factual findings of the appellate court are mistaken, absurd,
speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings
culled by the court of origin,15 this Court does not review them.

From an examination of the evidence on record, this Court finds nothing infirm in the appellate
courts conclusions with respect to the principal issue of whether private respondent committed
patent infringement to the prejudice of petitioner.
The burden of proof to substantiate a charge for patent infringement rests on the plaintiff.16 In the
case at bar, petitioners evidence consists primarily of its Letters Patent No. 14561, and the
testimony of Dr. Orinion, its general manager in the Philippines for its Animal Health Products
Division, by which it sought to show that its patent for the compound methyl 5 propylthio-2benzimidazole carbamate also covers the substance Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions thereof,
no mention is made of the compound Albendazole. All that the claims disclose are: the covered
invention, that is, the compound methyl 5 propylthio-2-benzimidazole carbamate; the compounds
being anthelmintic but nontoxic for animals or its ability to destroy parasites without harming the host
animals; and the patented methods, compositions or preparations involving the compound to
maximize its efficacy against certain kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is bound thereby and may not
claim anything beyond them.17 And so are the courts bound which may not add to or detract from the
claims matters not expressed or necessarily implied, nor may they enlarge the patent beyond the
scope of that which the inventor claimed and the patent office allowed, even if the patentee may
have been entitled to something more than the words it had chosen would include.18
It bears stressing that the mere absence of the word Albendazole in Letters Patent No. 14561 is not
determinative of Albendazoles non-inclusion in the claims of the patent. While Albendazole is
admittedly a chemical compound that exists by a name different from that covered in petitioners
letters patent, the language of Letter Patent No. 14561 fails to yield anything at all regarding
Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole inheres in
petitioners patent in spite of its omission therefrom or that the meaning of the claims of the patent
embraces the same.
While petitioner concedes that the mere literal wordings of its patent cannot establish private
respondents infringement, it urges this Court to apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a device
appropriates a prior invention by incorporating its innovative concept and, although with some
modification and change, performs substantially the same function in substantially the same way to
achieve substantially the same result.19 Yet again, a scrutiny of petitioners evidence fails to convince
this Court of the substantial sameness of petitioners patented compound and Albendazole. While
both compounds have the effect of neutralizing parasites in animals,identity of result does not
amount to infringement of patent unless Albendazole operates in substantially the same way or by
substantially the same means as the patented compound, even though it performs the same function
and achieves the same result.20 In other words, the principle or mode of operation must be the
same or substantially the same.21
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the
patentee having the burden to show that all three components of such equivalency test are met.22
As stated early on, petitioners evidence fails to explain how Albendazole is in every essential detail
identical to methyl 5 propylthio-2-benzimidazole carbamate. Apart from the fact that Albendazole is
an anthelmintic agent like methyl 5 propylthio-2-benzimidazole carbamate, nothing more is asserted
and accordingly substantiated regarding the method or means by which Albendazole weeds out

parasites in animals, thus giving no information on whether that method is substantially the same as
the manner by which petitioners compound works. The testimony of Dr. Orinion lends no support to
petitioners cause, he not having been presented or qualified as an expert witness who has the
knowledge or expertise on the matter of chemical compounds.
As for the concept of divisional applications proffered by petitioner, it comes into play when two or
more inventions are claimed in a single application but are of such a nature that a single patent may
not be issued for them.23 The applicant thus is required "to divide," that is, to limit the claims to
whichever invention he may elect, whereas those inventions not elected may be made the subject of
separate applications which are called "divisional applications."24 What this only means is that
petitioners methyl 5 propylthio-2-benzimidazole carbamate is an invention distinct from the other
inventions claimed in the original application divided out, Albendazole being one of those other
inventions. Otherwise, methyl 5 propylthio-2-benzimidazole carbamate would not have been the
subject of a divisional application if a single patent could have been issued for it as well as
Albendazole.
1wphi1

The foregoing discussions notwithstanding, this Court does not sustain the award of actual damages
and attorneys fees in favor of private respondent. The claimed actual damages of P330,000.00
representing lost profits or revenues incurred by private respondent as a result of the issuance of the
injunction against it, computed at the rate of 30% of its alleged P100,000.00 monthly gross sales for
eleven months, were supported by the testimonies of private respondents President25 and Executive
Vice-President that the average monthly sale of Impregon was P100,000.00 and that sales
plummeted to zero after the issuance of the injunction.26 While indemnification for actual or
compensatory damages covers not only the loss suffered (damnum emergens) but also profits which
the obligee failed to obtain (lucrum cessans or ganacias frustradas), it is necessary to prove the
actual amount of damages with a reasonable degree of certainty based on competent proof and on
the best evidence obtainable by the injured party.27 The testimonies of private respondents officers
are not the competent proof or best evidence obtainable to establish its right to actual or
compensatory damages for such damages also require presentation of documentary evidence to
substantiate a claim therefor.28
In the same vein, this Court does not sustain the grant by the appellate court of attorneys fees to
private respondent anchored on Article 2208 (2) of the Civil Code, private respondent having been
allegedly forced to litigate as a result of petitioners suit. Even if a claimant is compelled to litigate
with third persons or to incur expenses to protect its rights, still attorneys fees may not be awarded
where no sufficient showing of bad faith could be reflected in a partys persistence in a case other
than an erroneous conviction of the righteousness of his cause.29 There exists no evidence on record
indicating that petitioner was moved by malice in suing private respondent.
This Court, however, grants private respondent temperate or moderate damages in the amount
of P20,000.00 which it finds reasonable under the circumstances, it having suffered some pecuniary
loss the amount of which cannot, from the nature of the case, be established with certainty.30
WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED with
MODIFICATION. The award of actual or compensatory damages and attorneys fees to private
respondent, Tryco Pharma Corporation, is DELETED; instead, it is hereby awarded the amount
of P20,000.00 as temperate or moderate damages.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Corona, JJ., concur.

Footnotes

G.R. No. 97343 September 13, 1993

PASCUAL GODINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, SPECIAL FOURTH DIVISION and SV-AGRO
ENTERPRISES, INC.,respondents.
Jesus S. Anonat for petitioner.
Arturo M. Alinio for private respondent.
ROMERO, J.:
Through this petition for review in certiorari of a decision of the Court of Appeals affirming the
decision of the trial court, petitioner Pascual Godines seeks to reverse the adverse decision of the
Court a quo that he was liable for infringement of patent and unfair competition. The dispositive
portion of the assailed decision is hereby quoted to wit:
WHEREFORE, with the elimination of the award for attorney's fees, the judgment
appealed from is hereby AFFIRMED, with costs against appellant. 1
The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent
Office to one Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or
power tiller, the main components of which are the following: "(1) a vacuumatic house float; (2) a
harrow with adjustable operating handle; (3) a pair of paddy wheels; (4) a protective water covering
for the engine main drive; (5) a transmission case; (6) an operating handle; (7) an engine foundation
on the top midportion of the vacuumatic housing float to which the main engine drive is detachedly
installed; (8) a frontal frame extension above the quarter circularly shaped water covering hold
(sic) in place the transmission case; (9) a V-belt connection to the engine main drive with
transmission gear through the pulley, and (10) an idler pulley installed on the engine
foundation." 2 The patented hand tractor works in the following manner: "the engine drives the
transmission gear thru the V-belt, a driven pulley and a transmission shaft. The engine drives the
transmission gear by tensioning of the V-belt which is controlled by the idler pulley. The V-belt drives the
pulley attached to the transmission gear which in turn drives the shaft where the paddy wheels are
attached. The operator handles the hand tractor through a handle which is inclined upwardly and
supported by a pair of substanding pipes and reinforced by a U-shaped G.I. pipe at the V-shaped end." 3

The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private
respondent, from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment

executed by the latter in its favor. On October 31, 1979, SV-Agro Industries caused the publication
of the patent in Bulletin Today, a newspaper of general circulation.
In accordance with the patent, private respondent manufactured and sold the patented power tillers
with the patent imprinted on them. In 1979, SV-Agro Industries suffered a decline of more than 50%
in sales in its Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers
similar to those patented by private respondent were being manufactured and sold by petitioner
herein. Consequently, private respondent notified Pascual Godines about the existing patent and
demanded that the latter stop selling and manufacturing similar power tillers. Upon petitioner's failure
to comply with the demand, SV-Agro Industries filed before the Regional Trial Court a complaint for
infringement of patent and unfair competition.
After trial, the court held Pascual Godines liable for infringement of patent and unfair competition.
The dispositive portion of the decision reads as follows:
WHEREFORE, premises considered, JUDGMENT is hereby rendered in favor of the
plaintiff SV-Agro Industries Enterprises, Inc., and against defendant Pascual
Godines:
1. Declaring the writ of preliminary injunction issued by this Court against defendant
as permanent;
2. Ordering defendant Pascual Godines to pay plaintiff the sum of Fifty Thousand
Pesos (P50,000.00) as damages to its business reputation and goodwill, plus the
further sum of Eighty Thousand Pesos (P80,000.00) for unrealized profits during the
period defendant was manufacturing and selling copied or imitation floating power
tiller;
3. Ordering the defendant to pay the plaintiff, the further sum of Eight Thousand
Pesos (P8,000.00) as reimbursement of attorney's fees and other expenses of
litigation; and to pay the costs of the suit.
SO ORDERED. 4
The decision was affirmed by the appellate court.
Thereafter, this petition was filed. Petitioner maintains the defenses which he raised before the trial
and appellate courts, to wit: that he was not engaged in the manufacture and sale of the power tillers
as he made them only upon the special order of his customers who gave their own specifications;
hence, he could not be liable for infringement of patent and unfair competition; and that those made
by him were different from those being manufactured and sold by private respondent.
We find no merit in his arguments. The question of whether petitioner was manufacturing and selling
power tillers is a question of fact better addressed to the lower courts. In dismissing the first
argument of petitioner herein, the Court of Appeals quoted the findings of the court, to wit:
It is the contention of defendant that he did not manufacture or make imitations or
copies of plaintiff's turtle power tiller as what he merely did was to fabricate his
floating power tiller upon specifications and designs of those who ordered them.
However, this contention appears untenable in the light of the following
circumstances: 1) he admits in his Answer that he has been manufacturing power

tillers or hand tractors, selling and distributing them long before plaintiff started
selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental, meaning
that defendant is principally a manufacturer of power tillers, not upon specification
and design of buyers, but upon his own specification and design; 2) it would be
unbelievable that defendant would fabricate power tillers similar to the turtle power
tillers of plaintiff upon specifications of buyers without requiring a job order where the
specification and designs of those ordered are specified. No document was (sic) ever
been presented showing such job orders, and it is rather unusual for defendant to
manufacture something without the specification and designs, considering that he is
an engineer by profession and proprietor of the Ozamis Engineering shop. On the
other hand, it is also highly unusual for buyers to order the fabrication of a power tiller
or hand tractor and allow defendant to manufacture them merely based on their
verbal instructions. This is contrary to the usual business and manufacturing practice.
This is not only time consuming, but costly because it involves a trial and error
method, repeat jobs and material wastage. Defendant judicially admitted two (2) units
of the turtle power tiller sold by him to Policarpio Berondo. 5
Of general acceptance is the rule imbedded in our jurisprudence that ". . . the jurisdiction of the
Supreme Court in cases brought to it from the Court of Appeals in a petition for certiorari under Rule
45 of the Rules of Court is limited to the review of errors of law, and that said appellate court's
findings of fact are conclusive upon this Court." 6
The fact that petitioner herein manufactured and sold power tillers without patentee's authority has
been established by the courts despite petitioner's claims to the contrary.
The question now arises: Did petitioner's product infringe upon the patent of private respondent?
Tests have been established to determine infringement. These are (a) literal infringement; and (b)
the doctrine of equivalents. 7 In using literal infringement as a test, ". . . resort must be had, in the first
instance, to the words of the claim. If accused matter clearly falls within the claim, infringement is made
out and that is the end of it." 8 To determine whether the particular item falls within the literal meaning of
the patent claims, the court must juxtapose the claims of the patent and the accused product within the
overall context of the claims and specifications, to determine whether there is exact identity of all material
elements. 9

The trial court made the following observation:

Samples of the defendant's floating power tiller have been produced and inspected
by the court and compared with that of the turtle power tiller of the plaintiff (see
Exhibits H to H-28). In appearance and form, both the floating power tillers of the
defendant and the turtle power tiller of the plaintiff are virtually the same. Defendant
admitted to the Court that two (2) of the power inspected on March 12, 1984, were
manufactured and sold by him (see TSN, March 12, 1984, p. 7). The three power
tillers were placed alongside with each other. At the center was the turtle power tiller
of plaintiff, and on both sides thereof were the floating power tillers of defendant
(Exhibits H to H-2). Witness Rodrigo took photographs of the same power tillers
(front, side, top and back views for purposes of comparison (see Exhibits H-4 to H28). Viewed from any perspective or angle, the power tiller of the defendant is
identical and similar to that of the turtle power tiller of plaintiff in form, configuration,
design and appearance. The parts or components thereof are virtually the same.
Both have the circularly-shaped vacuumatic housing float, a paddy in front, a
protective water covering, a transmission box housing the transmission gears, a

handle which is V-shaped and inclined upwardly, attached to the side of the
vacuumatic housing float and supported by the upstanding G.I. pipes and an engine
base at the top midportion of the vacuumatic housing float to which the engine drive
may be attached. In operation, the floating power tiller of the defendant operates also
in similar manner as the turtle power tiller of plaintiff. This was admitted by the
defendant himself in court that they are operating on the same principles. (TSN,
August 19, 1987, p. 13) 10
Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller. The
patent issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand
tractor having a vacuumatic housing float on which the engine drive is held in place, the operating
handle, the harrow housing with its operating handle and the paddy wheel protective covering." 11 It
appears from the foregoing observation of the trial court that these claims of the patent and the features
of the patented utility model were copied by petitioner. We are compelled to arrive at no other conclusion
but that there was infringement.

Petitioner's argument that his power tillers were different from private respondent's is that of a
drowning man clutching at straws.
Recognizing that the logical fallback position of one in the place of defendant is to aver that his
product is different from the patented one, courts have adopted the doctrine of equivalents which
recognizes that minor modifications in a patented invention are sufficient to put the item beyond the
scope of literal infringement. 12 Thus, according to this doctrine, "(a)n infringement also occurs when a
device appropriates a prior invention by incorporating its innovative concept and, albeit with some
modification and change, performs substantially the same function in substantially the same way to
achieve substantially the same result." 13 The reason for the doctrine of equivalents is that to permit the
imitation of a patented invention which does not copy any literal detail would be to convert the protection
of the patent grant into a hollow and useless thing. Such imitation would leave room for indeed
encourage the unscrupulous copyist to make unimportant and insubstantial changes and substitutions
in the patent which, though adding nothing, would be enough to take the copied matter outside the claim,
and hence outside the reach of the law. 14

In this case, the trial court observed:

Defendant's witness Eduardo Caete, employed for 11 years as welder of the
Ozamis Engineering, and therefore actually involved in the making of the floating
power tillers of defendant tried to explain the difference between the floating power
tillers made by the defendant. But a careful examination between the two power
tillers will show that they will operate on the same fundamental principles. And,
according to establish jurisprudence, in infringement of patent, similarities or
differences are to be determined, not by the names of things, but in the light of what
elements do, and substantial, rather than technical, identity in the test. More
specifically, it is necessary and sufficient to constitute equivalency that the same
function can be performed in substantially the same way or manner, or by the same
or substantially the same, principle or mode of operation; but where these tests are
satisfied, mere differences of form or name are immaterial. . . . 15
It also stated:
To establish an infringement, it is not essential to show that the defendant adopted
the device or process in every particular; Proof of an adoption of the substance of the
thing will be sufficient. "In one sense," said Justice Brown, "it may be said that no
device can be adjudged an infringement that does not substantially correspond with

the patent. But another construction, which would limit these words to exact
mechanism described in the patent, would be so obviously unjust that no court could
be expected to adopt it. . . .
The law will protect a patentee against imitation of his patent by other forms and
proportions. If two devices do the same work in substantially the same way, and
accomplish substantially the same result, they are the same, even though they differ
in name, form, or shape. 16
We pronounce petitioner liable for infringement in accordance with Section 37 of Republic Act No.
165, as amended, providing, inter alia:
Sec. 37. Right of Patentees. A patentee shall have the exclusive right to make,
use and sell the patented machine, article or product, and to use the patented
process for the purpose of industry or commerce, throughout the territory of the
Philippines for the terms of the patent; and such making, using, or selling by any
person without the authorization of the Patentee constitutes infringement of the
patent. (Emphasis ours)
As far as the issue regarding unfair competition is concerned, suffice it to say that Republic Act No.
166, as amended, provides, inter alia:
Sec. 29. Unfair competition, rights and remedies. . . .
xxx xxx xxx
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers that the goods offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or who otherwise clothes the goods
with such appearance as shall deceive the public and defraud another of his
legitimate trade. . . .
xxx xxx xxx
Considering the foregoing, we find no reversible error in the decision of the Court of Appeals
affirming with modification the decision of the trial court.
WHEREFORE, premises considered, the decision of the Court of Appeals is hereby AFFIRMED and
this petition DENIED for lack of merit.
Bidin, Melo and Vitug, JJ., concur.
Feliciano, J., is on leave.

G.R. No. 121267

October 23, 2001

SMITH KLINE & FRENCH LABORATORIES, LTD. plaintiff-appellee,

vs.
COURT OF APPEALS and DANLEX RESEARCH LABORATORIES, INC., defendant-appellant.
KAPUNAN, J.:
This petition for review on certiorari assails the Decision dated January 27, 1995 of the Court of
Appeals in CA-G.R. SP No. 337701 which affirmed the decision of the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) granting a compulsory license to private respondent
Danlex Research Laboratories for the use of the pharmaceutical product Cimetidine. Likewise
assailed is the July 25, 1995 Resolution of the Court of Appeals denying the motion for
reconsideration filed by petitioner Smith Kline and French Laboratories, Ltd.
Petitioner is the assignee of Letters Patent No. 12207 covering the pharmaceutical
product Cimetidine, which relates to derivatives of heterocyclicthio or lower alkoxy or amino lower
alkyl thiourea, ureas or guanadines. Said patent was issued by the BPTTT to Graham John Durant,
John Collin Emmett and Robin Genellin on November 29, 1978.2
On August 21, 1989, private respondent filed with the BPTTT a petition for compulsory license to
manufacture and produce its own brand of medicines using Cimetidine. Private respondent invoked
Section 34 (1) (e) of Republic Act No. 165,3 (the Patent Law) the law then governing patents, which
states that an application for the grant of a compulsory license under a particular patent may be filed
with the BPTTT at any time after the lapse of two (2) years from the date of grant of such patent, if
the patented invention or article relates to food or medicine, or manufactured substances which can
be used as food or medicine, or is necessary for public health or public safety.4 The petition for
compulsory license stated that Cimetidine is useful as an antihistamine and in the treatment of
ulcers, and that private respondent is capable of using the patented product in the manufacture of a
useful product.5
Petitioner opposed the petition for compulsory license, arguing that the private respondent had no
cause of action and failed to allege how it intended to work the patented product. Petitioner further
stated that its manufacture, use and sales of Cimetidine satisfied the needs of the Philippine market,
hence, there was no need to grant a compulsory license to private respondent to manufacture, use
and sell the same. Finally, petitioner also claimed that the grant of a compulsory license to private
respondent would not promote public safety and that the latter was only motivated by pecuniary
gain.6
After both parties were heard, the BPTTT rendered a decision directing the issuance of a
compulsory license to private respondent to use, manufacture and sell in the Philippines its own
brand of pharmaceutical products containing Cimetidine and ordered the payment by private
respondent to petitioner of royalties at the rate of 2.5% of net sales in Philippine currency.7
Petitioner thereafter filed with the Court of Appeals a petition for review of the decision of the BPTTT,
raising the following arguments: (1) the BPTTT's decision is violative of the Paris Convention for the
Protection of Industrial Property; (2) said decision is an invalid exercise of police power; (3) the rate
of royalties payable to petitioner as fixed by the BPTTT was rendered without factual basis and
amounts to an expropriation of private property without just compensation; (4) the petition for

compulsory license should have been dismissed by the BPTTT for failure to prove the jurisdictional
requirement of publication.8
On January 27, 1995, the Court of Appeals promulgated its Decision, the dispositive portion of which
states:
WHEREFORE, the petition is DENIED, and the decision of the Bureau of Patents,
Trademarks and Technology Transfer is hereby AFFIRMED, with costs against the
Petitioner.
SO ORDERED.9
In affirming the decision of the BPTTT, the appellate court held that the grant of a compulsory
license to private respondent for the manufacture and use of Cimetidine is in accord with the Patent
Law since the patented product is medicinal in nature, and therefore necessary for the promotion of
public health and safety.10 It explained further that the provisions of the Patent Law permitting the
grant of a compulsory license are intended not only to give a chance to others to supply the public
with the quantity of the patented article but especially to prevent the building up of patent
monopolies.11 Neither did the appellate court find the royalty rate of 2.5% of net sales fixed by the
BPTTT unreasonable, considering that what was granted under the compulsory license is only the
right to manufacture Cimetidine, without any technical assistance from petitioner, and royalty rates
identical to that fixed by the BPTTT have been prescribed for the grant of compulsory license in a
good number of patent cases.12 The Court of Appeals also ruled that contrary to petitioner's claim,
private respondent complied with the requirement of publication under the Patent Law and had
submitted proof of such compliance.13
Not satisfied with the appellate court's decision, petitioner filed a motion for reconsideration thereof
as well as a motion for the issuance of a temporary restraining order against private respondent's
sister company, Montreal Pharmaceutical, Inc. to refrain from marketing a product similar
to Cimetidine, but both motions were denied by the Court of Appeals in its Resolution of July 25,
1995.14
Petitioner thus filed the present petition on September 15, 1995, with the following assignment of
errors:
I. The respondent Court erred in upholding the validity of the decision of public respondent
BPTTT which is an arbitrary exercise of police power and is violative of international law.
II. The respondent Court erred in holding that compulsory licensing will not create a
confusion that the patented product is the brainchild of private respondent Danlex and not of
petitioner.
III.Assuming that the grant of compulsory license is in order, the respondent Court still erred
in holding that the BPTTT decision fixing the royalty at 2.5% of the net wholesale price in
peso does not amount to expropriation of private property without just compensation.
IV.The respondent Court erred in finding that the jurisdictional requirement of publication in a
newspaper of general circulation for three (3) consecutive weeks has been complied with by
private respondent Danlex.15

While petitioner concedes that the State in the exercise of police power may regulate the
manufacture and use of medicines through the enactment and implementation of pertinent laws, it
states that such exercise is valid only if the means employed are reasonably necessary for the
accomplishment of the purpose and if not unduly oppressive.16 According to petitioner, the grant of a
compulsory license to private respondent is an invalid exercise of police power since it was not
shown that there is an overwhelming public necessity for such grant, considering that petitioner is
able to provide an adequate supply of i to satisfy the needs of the Philippine market. Petitioner also
claims that the grant of a compulsory license to private respondent unjustly deprives it of a
reasonable return on its investment.17 It argues further that the provisions of the Patent Law on
compulsory licensing contravene the Convention of Paris for the Protection of Industrial
Property18 (Paris Convention), which allegedly permits the granting of a compulsory license over a
patented product only to prevent abuses which might result from the exercise of the exclusive rights
conferred by the patent,19 or on the ground of failure to work or insufficient working of the patented
product, within four years from the date of filing of the patent application or three years from the date
of grant of the patent, whichever expires last.20 Petitioner opines that the inclusion of grounds for the
grant of a compulsory license in Section 34 of the Patent Law other than those provided under the
Paris Convention constitutes a violation of the Philippines' obligation to adhere to the provisions of
said treaty.21
It is also contended by petitioner that the grant of a compulsory license to private respondent will
allow the latter to liberally manufacture and sell medicinal products containing Cimetidine without
even extending to petitioner due recognition for pioneering the development and worldwide
acceptance of said invention, and will unreasonably dilute petitioner's right over the patent.22
Petitioner likewise asseverates that the rate of royalty fixed by the BPTTT at 2.5% of net sales is
grossly inadequate, taking into consideration its huge investments of money, time and other
resources in the research and development, as well as marketing of Cimetidine. It is further alleged
that such rate has no factual basis since the appellate court and the BPTTT relied solely on
analogous cases and did not explain how such rate was arrived at.23
Lastly, petitioner claims that the appellate court erred in ruling that private respondent had complied
with the requirement of publication of the notice of the filing of the petition for compulsory license
because private respondent failed to formally offer in evidence copies of the notice of filing of the
petition and notice of the date of hearing thereof as published and the affidavits of publication
thereof. Thus, it says, the BPTTT did not properly acquire jurisdiction over the petition for
compulsory license.24
In its Comment to the Petition, private respondent adopted the reasoning of the Court of Appeals in
the assailed decision and prayed that the petition be denied for lack of merit.25
The petition has no merit.
The Court of Appeals did not err in affirming the validity of the grant by the BPTTT of a compulsory
license to private respondent for the use, manufacture and sale of Cimetidine. The said grant is in
accord with Section 34 of the Patent Law which provides:
Grounds for Compulsory Licensing. (1) Any person may apply to the Director for the
grant of a license under a particular patent at any time after the expiration of two years
from the date of the grant of the patent, under any of the following circumstances:
(a) If the patented invention is not being worked within the Philippines on a commercial
scale, although capable of being so worked, without satisfactory reason;

(b) If the demand of the patented article in the Philippines is not being met to an adequate
extent and on reasonable terms;
(c) If, by reason of refusal of the patentee to grant a license or licenses on reasonable terms,
or by reason of the conditions attached by the patentee to licensee or to the purchase, lease
or use of the patented article or working of the patented process or machine for production,
the establishment of any new trade or industry in the Philippines is prevented, or the trade or
industry therein is unduly restrained;
(d) If the working of the invention within the country is being prevented or hindered by the
importation of the patented article;
(e) If the patented invention or article relates to food or medicine or manufactured
substances which can be used as food or medicine, or is necessary for public health
or public safety.
(2) In any of the above cases, a compulsory license shall be granted to the petitioner
provided that he has proved his capability to work the patented product or to make
use of the patented product in the manufacture of a useful product, or to employ the
patented process.
(3) The term "worked" or "working" as used in this section means the manufacture and sale
of the patented article, of patented machine, or the application of the patented process for
production, in or by means of a definite and substantial establishment or organization in the
Philippines and on a scale which is reasonable and adequate under the circumstances.
Importation shall not constitute "working". (Emphasis supplied.)
The grant of the compulsory license satisfies the requirements of the foregoing provision. More than
ten years have passed since the patent for Cimetidine was issued to petitioner and its predecessorsin-interest, and the compulsory license applied for by private respondent is for the use, manufacture
and sale of a medicinal product. Furthermore, both the appellate court and the BPTTT found that
private respondent had the capability to workCimetidine or to make use thereof in the manufacture of
a useful product.
Petitioner's contention that Section 34 of the Patent Law contravenes the Paris Convention because
the former provides for grounds for the grant of a compulsory license in addition to those found in the
latter, is likewise incorrect. Article 5, Section A(2) of the Paris Convention states:
Each country of the union shall have the right to take legislative measures providing for the
grant of compulsory licenses to prevent the abuses which might result from the exercise of
the exclusive rights conferred by the patent, for example, failure to work.26
This issue has already been resolved by this Court in the case of Smith Kline & French Laboratories,
Ltd. vs. Court of Appeals,27 where petitioner herein questioned the BPTTT's grant of a compulsory
license to Doctors Pharmaceuticals, Inc. also for the manufacture, use and sale of Cimetidine. We
found no inconsistency between Section 34 and the Paris Convention and held that:
It is thus clear that Section A(2) of Article 5 [of the Paris Convention] unequivocally and
explicitly respects the right of member countries to adopt legislative measures to provide for
the grant of compulsory licenses to prevent abuses which might result from the exercise of
the exclusive rights conferred by the patent. An example provided of possible abuses is

"failure to work;" however, as such, is merely supplied by way of an example, it is plain that
the treaty does not preclude the inclusion of other forms of categories of abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the
Convention, fits well within the aforequoted provisions of Article 5 of the Paris Convention. In the
explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative intent in
the grant of a compulsory license was not only to afford others an opportunity to provide the
public with the quantity of the patented product, but also to prevent the growth of
monopolies [Congressional Record, House of Representatives, 12 May 957, 998]. Certainly, the
growth of monopolies was among the abuses which Section A, Article 5 of the Convention
foresaw, and which our Congress likewise wished to prevent in enacting R.A. No.
165.28(Emphasis supplied.)
Neither does the Court agree with petitioner that the grant of the compulsory license to private
respondent was erroneous because the same would lead the public to think that the Cimetidine is
the invention of private respondent and not of petitioner. Such fears are unfounded since, as the
appellate court pointed out in the assailed decision, by the grant of the compulsory license, private
respondent as licensee explicitly acknowledges that petitioner is the source of the patented
product Cimetidine.29 Even assuming arguendo that such confusion may indeed occur, the
disadvantage is far outweighed by the benefits resulting from the grant of the compulsory license,
such as an increased supply of pharmaceutical products containing Cimetidine, and the consequent
reduction in the prices thereof.30
There is likewise no basis for the allegation that the grant of a compulsory license to private
respondent results in the deprivation of petitioner's property without just compensation. It must be
pointed out that as owner of Letters Patent No. 12207, petitioner had already enjoyed exclusive
rights to manufacture, use and sell Cimetidine for at least two years from its grant in November,
1978. Even if other entities like private respondent are subsequently allowed to manufacture, use
and sell the patented invention by virtue of a compulsory license, petitioner as owner of the patent
would still receive remuneration for the use of such product in the form of royalties.
Anent the perceived inadequacy of the royalty awarded to petitioner, the Court of Appeals correctly
held that the rate of 2.5% of net wholesale price fixed by the Director of the BPTTT is in accord with
the Patent Law. Said law provides:
Sec. 35. Grant of License.(1) If the Director finds that a case for the grant of a license
under Section 34 hereof has been made out, he shall, within one hundred eighty days from
the date the petition was filed, order the grant of an appropriate license. The order shall
state the terms and conditions of the license which he himself must fix in default of an
agreement on the matter manifested or submitted by the parties during the hearing.
xxx
Section 35-B. Terms and Conditions of Compulsory License. (1) A compulsory license
shall be non-exclusive, but this shall be without prejudice to the licensee's right to oppose an
application for such a new license.
(2) The terms and conditions of a compulsory license, fixed in accordance with Section 35,
may contain obligations and restrictions both for the licensee and for the registered owner of
the patent.

(3) A compulsory license shall only be granted subject to the payment of adequate
royalties commensurate with the extent to which the invention is worked. However,
royalty payments shall not exceed five percent (5%) of the net wholesale price (as
defined in Section 33-A) of the products manufactured under the license. If the product,
substance, or process subject of the compulsory license is involved in an industrial project
approved by the Board of Investments, the royalty payable to the patentee or patentees shall
not exceed three percent (3%) of the net wholesale price (as defined in Section 33-A) of the
patented commodity/and or commodity manufactured under the patented process; the same
rate of royalty shall be paid whenever two or more patents are involved; which royalty shall
be distributed to the patentees in rates proportional to the extent of commercial use by the
licensee giving preferential values to the holder of the oldest subsisting product patent.
xxx
Under the aforequoted provisions, in the absence of any agreement between the parties with respect
to a compulsory license, the Director of the BPTTT may fix the terms thereof, including the rate of
the royalty payable to the licensor. The law explicitly provides that the rate of royalty shall not exceed
five percent (5%) of the net wholesale price.
The Court agrees with the appellate court's ruling that the rate of royalty payments fixed by the
Director of the BPTTT is reasonable. The appellate court, citing Price vs. United Laboratories,31 ruled
as such, considering that the compulsory license awarded to private respondent consists only of the
bare right to use the patented invention in the manufacture of another product, without any technical
assistance from the licensor.32Furthermore, this Court had earlier noted in the Price case that
identical royalty rates have been prescribed by the Director of the BPTTT in numerous patent
cases.33
There was thus no error on the part of the Court of Appeals in affirming the royalty rate fixed by the
Director of the BPTTT, since it was not shown that the latter erred or abused his discretion in
prescribing said rate. The rule is that factual findings of administrative bodies, which are considered
as experts in their respective fields, are accorded not only respect but even finality if the same are
supported by substantial evidence.34
Finally, as to the alleged lack of jurisdiction of the BPTTT over the petition filed by private
respondent for failure to comply with the publication requirement under Section 35-F of R.A. No.
165, the Court holds that petitioner is estopped from questioning the same since it did not raise the
issue of lack of jurisdiction at the earliest possible opportunity, i.e., during the hearings before the
BPTTT.35 The Court notes that petitioner raised this contention for the first time when it appealed the
case to the appellate court.
WHEREFORE, the petition is hereby DENIED for lack of merit and the Decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

G.R. No. 118708 February 2, 1998

CRESER PRECISION SYSTEMS, INC., petitioner,
vs.
COURT OF APPEALS AND FLORO INTERNATIONAL CORP., respondents.

MARTINEZ, J.:
This petition for review on certiorari assails the decision 1 of the Court of Appeals dated November 9,
1994 in C.A.-G.R. SP No. 34425 entitled "Floro International Corp. vs. Hon. Tirso D.C Cruz and Creser
Precision System, Inc.", the dispositive portion of which reads:

WHEREFORE, THE PETITION IS HEREBY GRANTED. THE COMPLAINT FOR

INJUNCTION AND DAMAGES, CIVIL CASE NO. 93-1856 BEFORE THE
RESPONDENT JUDGE IS HEREBY ORDERED DISMISSED AND HIS ORDERS
THEREIN OF DECEMBER 29, 1993 AND MAY 11, 1994 ARE ORDERED SET
ASIDE.
Private respondent is a domestic corporation engaged in the manufacture, production, distribution
and sale of military armaments, munitions, airmunitions and other similar materials. 2
On January 23, 1990, private respondent was granted by the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT), a Letters Patent No. UM-6938 3 covering an aerial fuze which was
published in the September-October-1990, Vol. III, No. 5 issue of the Bureau of Patent's Official Gazette. 4

Sometime in November 1993, private respondent, through its president, Mr. Gregory Floro, Jr.,
discovered that petitioner submitted samples of its patented aerial fuze to the Armed Forces of the
Philippines (AFP) for testing. He learned that petitioner was claiming the aforesaid aerial fuze as its
own and planning to bid and manufacture the same commercially without license or authority from
private respondent. To protect its right, private respondent on December 3, 1993, sent a letter 5 to
petitioner advising it of its existing patent and its rights thereunder, warning petitioner of a possible court
action and/or application for injunction, should it proceed with the scheduled testing by the military on
December 7, 1993.

In response to private respondent's demand, petitioner filed on December 8, 1993 a complaint 6 for
injunction and damages arising from the alleged infringement before the Regional Trial Court of Quezon
City, Branch 88. The complaint alleged, among others: that petitioner is the first, true and actual inventor
of an aerial fuze denominated as "Fuze, PDR 77 CB4" which it developed as early as December 1981
under the Self-Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner
began supplying the AFP with the said aerial fuze; that private respondent's aerial fuze is identical in
every respect to the petitioner's fuze; and that the only difference between the two fuzes are miniscule
and merely cosmetic in nature. Petitioner prayed that a temporary restraining order and/or writ of
preliminary injunction be issued enjoining private respondent including any and all persons acting on its
behalf from manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in
connection therewith or tending to prejudice and deprive it of any rights, privileges and benefits to which it
is duly entitled as the first, true and actual inventor of the aerial fuze.

On December 10, 1993, the trial court issued a temporary restraining order. Thereafter, hearings
were held on the application of petitioner for the issuance of a writ of preliminary injunction, with both
parties presenting their evidence. After the hearings, the trial court directed the parties to submit
their respective memoranda in support of their positions.
On December 27, 1993, private respondent submitted its memorandum 7 alleging that petitioner has
no cause of action to file a complaint for infringement against it since it has no patent for the aerial
fuze which it claims to have invented; that petitioner's available remedy is to file a petition for cancellation
of patent before the Bureau of Patents; that private respondent as the patent holder cannot be stripped of
its property right over the patented aerial fuze consisting of the exclusive right to manufacture, use and
sell the same and that it stands to suffer irreparable damage and injury if it is enjoined from the exercise
of its property rights over its patent.

On December 29, 1993, the trial court issued an Order 8 granting the issuance of a writ of preliminary
injunction against private respondent the dispositive portion of which reads:

WHEREFORE, plaintiffs application for the issuance of a writ of preliminary injunction

is granted and, upon posting of the corresponding bond by plaintiff in the amount of
PHP 200,000.00, let the writ of preliminary injunction be issued by the branch Clerk
of this Court enjoining the defendant and any and all persons acting on its behalf or
by and under its authority, from manufacturing, marketing and/or selling aerial
fuzes identical, to those of plaintiff, and from profiting therefrom, and/or from
performing any other act in connection therewith until further orders from this Court.
Private respondent moved for reconsideration but this was denied by the trial court in its Order 9 of
May 11, 1994, pertinent portions of which read:

For resolution before this Court is the Motion for Reconsideration filed by the
defendant and the plaintiff's Opposition thereto. The Court finds no sufficient cause
to reconsider its order dated December 29, 1993. During the hearing for the issuance
of the preliminary injunction, the plaintiff has amply proven its entitlement to the relief
prayed for. It is undisputed that the plaintiff has developed its aerial fuze way back in
1981 while the defendant began manufacturing the same only in 1987. Thus, it is
only logical to conclude that it was the plaintiff's aerial fuze that was copied or
imitated which gives the plaintiff the right to have the defendant enjoined "from
manufacturing, marketing and/or selling aerial fuzes identical to those of the plaintiff,
and from profiting therefrom and/or performing any other act in connection therewith
until further orders from this Court." With regards to the defendant's assertion that an
action for infringement may only be brought by "anyone possessing right, title or
interest to the patented invention," (Section 42, RA 165) qualified by Sec. 10, RA 165
to include only "the first true and actual inventor, his heirs, legal representatives or
assignees, "this court finds the foregoing to be untenable. Sec. 10 merely
enumerates the persons who may have an invention patented which does not
necessarily limit to these persons the right to institute an action for infringement.
Defendant further contends that the order in issue is disruptive of the status quo. On
the contrary, the order issued by the Court in effect maintained the status quo. The
last actual, peaceable uncontested status existing prior to this controversy was the
plaintiff manufacturing and selling its own aerial fuzes PDR 77 CB4 which was
ordered stopped through the defendant's letter. With the issuance of the order, the
operations of the plaintiff continue. Lastly, this court believes that the defendant will
not suffer irreparable injury by virtue of said order. The defendant's claim is primarily
hinged on its patent (Letters Patent No. UM-6983) the validity of which is being
questioned in this case.

WHEREFORE, premises considered, the Motion for Reconsideration is hereby

denied for lack of merit.
SO ORDERED.
Aggrieved, private respondent on June 27, 1994, filed a petition for certiorari, mandamus and
prohibition 10 before respondent Court of Appeals raising as grounds the following:
a. Petitioner has no cause of action for infringement against private respondent, the
latter not having any patent for the aerial fuze which it claims to have invented and
developed and allegedly infringed by private respondent;
b. the case being an action for cancellation or invalidation of private respondent's
Letters Patent over its own aerial fuze, the proper venue is the Office of the Director
of Patents;
c. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in
finding that petitioner has fully established its clear title or right to preliminary
injunction;
d. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in
granting the preliminary injunction, it being disruptive of the status quo; and
e. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in
granting the preliminary injunction thereby depriving private respondent of its
property rights over the patentedaerial fuze and cause it irreparable damages.
On November 9, 1994, the respondent court rendered the now assailed decision reversing the trial
court's Order of December 29, 1993 and dismissing the complaint filed by petitioner.
The motion for reconsideration was also denied on January 17, 1995. 11 Hence, this present petition.
It is petitioner's contention that it can file, under Section 42 of the Patent Law (R.A. 165), an action
for infringement not as a patentee but as an entity in possession of a right, title or interest in and to
the patented invention. It advances the theory that while the absence of a patent may prevent one
from lawfully suing another for infringement of said patent, such absence does not bar the first true
and actual inventor of the patented invention from suing another who was granted a patent in a suit
for declaratory or injunctive relief recognized under American patent laws. This remedy, petitioner
points out, may be likened to a civil action for infringement under Section 42 of the Philippine Patent
Law.
We find the above arguments untenable.
Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly provides:
Sec. 42. Civil action for infringement. Any patentee, or anyone possessing any
right, title or interest in and to the patented invention, whose rights have been
infringed, may bring a civil action before the proper Court of First Instance (now
Regional Trial court), to recover from the infringer damages sustained by reason of
the infringement and to secure an injunction for the protection of his right. . . .

Under the aforequoted law, only the patentee or his successors-in-interest may file an action for
infringement. The phrase "anyone possessing any right, title or interest in and to the patented
invention" upon which petitioner maintains its present suit, refers only to the patentee's successorsin-interest, assignees or grantees since actions for infringement of patent may be brought in the
name of the person or persons interested, whether as patentee, assignees, or as grantees, of the
exclusive right. 12 Moreover, there can be no infringement of a patent until a patent has been issued,
since whatever right one has to the invention covered by the patent arises alone from the grant of
patent.13 In short, a person or entity who has not been granted letters patent over an invention and has
not acquired any light or title thereto either as assignee or as licensee, has no cause of action for
infringement because the right to maintain an infringement suit depends on the existence of the patent.

14

Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause of
action to institute the petition for injunction and damages arising from the alleged infringement by
private respondent. While petitioner claims to be the first inventor of the aerial fuze, still it has no
right of property over the same upon which it can maintain a suit unless it obtains a patent therefor.
Under American jurisprudence, an inventor has no common-law right to a monopoly of his invention.
He has the right to make, use and vend his own invention, but if he voluntarily discloses it, such as
by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the
inventor the right to exclude all others. As a patentee, he has the exclusive right of making, using or
selling the invention. 15
Further, the remedy of declaratory judgment or injunctive suit on patent invalidity relied upon by
petitioner cannot be likened to the civil action for infringement under Section 42 of the Patent Law.
The reason for this is that the said remedy is available only to the patent holder or his successors-ininterest. Thus, anyone who has no patent over an invention but claims to have a right or interest
thereto can not file an action for declaratory judgment or injunctive suit which is not recognized in
this jurisdiction. Said person, however, is not left without any remedy. He can, under Section 28 of
the aforementioned law, file a petition for cancellation of the patent within three (3) years from the
publication of said patent with the Director of Patents and raise as ground therefor that the person to
whom the patent was issued is not the true and actual inventor. Hence, petitioner's remedy is not to
file an action for injunction or infringement but to file a petition for cancellation of private respondent's
patent. Petitioner however failed to do so. As such, it can not now assail or impugn the validity of the
private respondent's letters patent by claiming that it is the true and actual inventor of the aerial fuze.
Thus, as correctly ruled by the respondent Court of Appeals in its assailed decision: "since the
petitioner (private respondent herein) is the patentee of the disputed invention embraced by letters of
patent UM No. 6938 issued to it on January 23, 1990 by the Bureau of Patents, it has in its favor not
only the presumption of validity of its patent, but that of a legal and factual first and true inventor of
the invention."
In the case of Aguas vs. De Leon, 16 we stated that:
The validity of the patent issued by the Philippine Patent Office in favor of the private
respondent and the question over the investments, novelty and usefulness of the
improved process therein specified and described are matters which are better
determined by the Philippines Patent Office. The technical Staff of the Philippines
Patent Office, composed of experts in their field, have, by the issuance of the patent
in question, accepted the thinness of the private respondent's new tiles as a
discovery. There is a presumption that the Philippine Patent Office has correctly
determined the patentability of the improvement by the private respondent of the
process in question.

In fine, in the absence of error or abuse of power or lack of jurisdiction or grave abuse of discretion,
we sustain the assailed decision of the respondent Court of Appeal.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ., concur.

G.R. No. 113388 September 5, 1997

ANGELITA MANZANO, petitioner,
vs.
COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY
MANUFACTURING CORPORATION, respondents.

BELLOSILLO, J.:
The primary purpose of the patent system is not the reward of the individual but the advancement of
the arts and sciences. The function of a patent is to add to the sum of useful knowledge and one of
the purposes of the patent system is to encourage dissemination of information concerning
discoveries and inventions. This is a matter which is properly within the competence of the Patent
Office the official action of which has the presumption of correctness and may not be interfered with
in the absence of new evidence carrying thorough conviction that the Office has erred. Since the
Patent Office is an expert body preeminently qualified to determine questions of patentability, its
findings must be accepted if they are consistent with the evidence, with doubts as to patentability
resolved in favor of the Patent Office. 1
Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for
the cancellation of Letters Patent No. UM-4609 for a gas burner registered in the name of
respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry
and Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the
utility model covered by the letters patent, in this case, an LPG gas burner, was not inventive, new or
useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14, RA
No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual
inventor nor did she derive her rights from the original, true and actual inventor of the utility model
covered by the letters patent; and, (d) the letters patent was secured by means of fraud or
misrepresentation. In support of her petition for cancellation petitioner further alleged that (a) the
utility model covered by the letters patent of respondent had been known or used by others in the
Philippines for more than one (1) year before she filed her application for letters patent on 9
December 1979; (b) the products which were produced in accordance with the utility model covered
by the letters patent had been in public use or on sale in the Philippines for more than one (1) year
before the application for patent therefor was filed.

Petitioner presented the following documents which she correspondingly marked as exhibits: (a)
affidavit of petitioner alleging the existence of prior art, marked Exh. "A;" (b) a brochure distributed by
Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by Ransome
Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by Esso Gasul
or Esso Standard Eastern, Inc., of the Philippines showing a picture of another similar burner with
top elevation view and another perspective view of the same burner, marked Exh. "E."
Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the
UNITED FOUNDRY where respondent Melecia Madolaria used to be affiliated with from 1965 to
1970; that Ong helped in the casting of an LPG burner which was the same utility model of a burner
for which Letters Patent No. UM-4609 was issued, and that after her husband's separation from the
shop she organized Besco Metal Manufacturing (BESCO METAL, for brevity) for the casting of LPG
burners one of which had the configuration, form and component parts similar to those being
manufactured by UNITED FOUNDRY. Petitioner presented in evidence an alleged model of an LPG
burner marked Exh. "K" and covered by the Letters Patent of respondent, and testified that it was
given to her in January 1982 by one of her customers who allegedly acquired it from UNITED
FOUNDRY. Petitioner also presented in evidence her own model of an LPG burner called
"Ransome" burner marked Exh. "L," which was allegedly manufactured in 1974 or 1975 and sold by
her in the course of her business operation in the name of BESCO METAL. Petitioner claimed that
this "Ransome" burner (Exh. "L") had the same configuration and mechanism as that of the model
which was patented in favor of private respondent Melecia Madolaria. Also presented by petitioner
was a burner cup of an imported "Ransome" burner marked Exh "M" which was allegedly existing
even before the patent application of private respondent.
Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel
Francisco. Ong testified that he worked as a helper in the UNITED FOUNDRY from 1965 to 1970
where he helped in the casting of LPG burners with the same form, configuration and mechanism as
that of the model covered by the Letters Patent issued to private respondent. Francisco testified that
he had been employed with the Manila Gas Corporation from 1930 to 1941 and from 1952 up to
1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome" burners
way back in 1965 which were advertised through brochures to promote their sale.
Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who
testified, among others, that he was the General Supervisor of the UNITED FOUNDRY in the
foundry, machine and buffing section; that in his early years with the company, UNITED FOUNDRY
was engaged in the manufacture of different kinds of gas stoves as well as burners based on
sketches and specifications furnished by customers; that the company manufactured early models of
single-piece types of burners where the mouth and throat were not detachable; that in the latter part
of 1978 respondent Melecia Madolaria confided in him that complaints were being brought to her
attention concerning the early models being manufactured; that he was then instructed by private
respondent to cast several experimental models based on revised sketches and specifications; that
private respondent again made some innovations; that after a few months, private respondent
discovered the solution to all the defects of the earlier models and, based on her latest sketches and
specifications, he was able to cast several models incorporating the additions to the innovations
introduced in the models. Various tests were conducted on the latest model in the presence and
under the supervision of Melecia Madolaria and they obtained perfect results. Rolando Madolaria
testified that private respondent decided to file her application for utility model patent in December
1979.
On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the
petition for cancellation and holding that the evidence of petitioner was not able to establish
convincingly that the patented utility model of private respondent was anticipated. Not one of the
various pictorial representations of business clearly and convincingly showed that the devices

presented by petitioner was identical or substantially identical with the utility model of the
respondent. The decision also stated that even assuming that the brochures depicted clearly each
and every element of the patented gas burner device so that the prior art and patented device
became identical although in truth they were not, they could not serve as anticipatory bars for the
reason that they were undated. The dates when they were distributed to the public were not
indicated and, therefore, were useless prior art references. The records and evidence also do not
support the petitioner's contention that Letters Patent No. UM-4609 was obtained by means of fraud
and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the
then applicant Melecia Madolaria withheld with intent to deceive material facts which, if disclosed,
would have resulted in the refusal by the Philippine Patent Office to issue the Letters Patent under
inquiry.
Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15
October 1993 affirmed the decision of the Director of Patents. Hence, this petition for review
on certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in
actuality did not exist between the model of private respondent covered by Letters Patent No. UM4609 and the previously known model of Esso Standard Eastern, Inc., and Manila Gas Corporation,
making such imaginary differences grounded entirely on speculation, surmises and conjectures; (b)
in rendering judgment based on misapprehension of facts; (c) in relying mainly on the testimony of
private respondent's sole witness Rolando Madolaria; and, (d) in not cancelling Letters Patent No.
UM-4609 in the name of private respondent.
Petitioner submits that the differences cited by the Court of Appeals between the utility model of
private respondent and the models of Manila Gas Corporation and Esso Standard Eastern, Inc., are
more imaginary than real. She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the brochures
of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the cup-shaped
burner mouth and threaded hole on the side are shown to be similar to the utility model of private
respondent. The exhibits also show a detachable burner mouth having a plurality of upwardly
existing undulations adopted to act as gas passage when the cover is attached to the top of said
cup-shaped mouth all of which are the same as those in the patented model. Petitioner also denies
as substantial difference the short cylindrical tube of the burner mouth appearing in the brochures of
the burners being sold by Manila Gas Corporation and the long cylindered tube of private
respondent's model of the gas burner.
Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in
form, operation and mechanism and parts between the utility model of private respondent and those
depicted in the brochures. The findings of the Patent Office and the Court of Appeals that the
brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot
overcome the fact of their circulation before private respondent filed her application for utility model
patent. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern,
Inc., disappeared before 1979 and reappeared only during the Martial Law years as Petrophil
Corporation. Petitioner also emphasizes that the brochures indicated the telephone number of
Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before
1975 because telephones in Metro Manila started to have six (6) numbers only after that year.
Petitioner further contends that the utility model of private respondent is absolutely similar to the
LPG burner being sold by petitioner in 1975 and 1976, and also to the "Ransome" burner depicted in
the old brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., fabricated by
Ransome Torch and Burner Company of Oakland, California, USA, especially when considered
through actual physical examination, assembly and disassembly of the models of petitioner and
private respondent. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong
Bun Tua and Fidel Francisco for their failure to produce documents on the alleged importation by

Manila Gas Corporation of "Ransome" burners in 1965 which had the same configuration, form and
mechanism as that of the private respondent's patented model.
Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria should
not have been given weight by the Patent Office and the Court of Appeals because it contained
mere after-thoughts and pretensions.
We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents,
expressly provides
Sec. 7. Inventians patentable. Any invention of a new and useful machine, manufactured
product or substance, process or an improvement of any of the foregoing, shall be
patentable.
Further, Sec. 55 of the same law provides
Sec. 55. Design patents and patents for utility models. (a) Any new, original and
ornamental design for an article of manufacture and (b) any new model of implements or
tools or of any industrial product or of part of the same, which does not possess the quality of
invention, but which is of practical utility by reason of its form, configuration, construction or
composition, may be protected by the author thereof, the former by a patent for a design and
the latter by a patent for a utility model, in the same manner and subject to the same
provisions and requirements as relate to patents for inventions insofar as they are applicable
except as otherwise herein provided.
The element of novelty is an essential requisite of the patentability of an invention or discovery. If a
device or process has been known or used by others prior to its invention or discovery by the
applicant, an application for a patent therefor should be denied; and if the application has been
granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will
hold it void and ineffective. 2 It has been repeatedly held that an invention must possess the essential
elements of novelty, originality and precedence, and for the patentee to be entitled to the protection the
invention must be new to the world. 3

In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981,
the Philippine Patent Office found her invention novel and patentable. The issuance of such patent
creates a presumption which yields only to clear and cogent evidence that the patentee was the
original and first inventor. The burden of proving want of novelty is on him who avers it and the
burden is a heavy one which is met only by clear and satisfactory proof which overcomes every
reasonable doubt. 4 Hence, a utility model shall not be considered "new" if before the application for a
patent it has been publicly known or publicly used in this country or has been described in a printed
publication or publications circulated within the country, or if it is substantially similar to any other utility
model so known, used or described within the country. 5

As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption
of legality of the issuance of UM-4609 to respondent Madolaria was not legally met by petitioner in
her action for the cancellation of the patent. Thus the Director of Patents explained his reasons for
the denial of the petition to cancel private respondent's patent
Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not
anticipated. Not one of the various pictorial representations of burners clearly and
convincingly show that the device presented therein is identical or substantially identical in
construction with the aforesaid utility model. It is relevant and material to state that in

determining whether novelty or newness is negatived by any prior art, only one item of the
prior art may be used at a time. For anticipation to occur, the prior art must show that each
element is found either expressly or described or under principles of inherency in a single
prior art reference or that the claimed invention was probably known in a single prior art
device or practice. (Kalman v. Kimberly Clark, 218 USPQ 781, 789)
Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours
each and every element of the patented gas burner device so that the prior art and the said
patented device become identical, although in truth they are not, they cannot serve as
anticipatory bars for the reason that they are undated. The dates when they were distributed
to the public were not indicated and, therefore, they are useless prior art references.
xxx xxx xxx
Furthermore, and more significantly, the model marked Exh. "K" does not show whether or
not it was manufactured and/or cast before the application for the issuance of patent for the
LPG burner was filed by Melecia Madolaria.
With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner allegedly
manufactured sometime in 1974 or 1975 and sold by her in the course of her business
operation in the name of Besco Metal Manufacturing, which burner was denominated as
"Ransome" burner
xxx xxx xxx
But a careful examination of Exh. "L" would show that it does not bear the word "Ransome"
which is the burner referred to as the product being sold by the Petitioner. This is not the way
to prove that Exh. "L" anticipates Letters Patent No. UM-4609 through Exhs. "C" and "D."
Another factor working against the Petitioner's claims is that an examination of Exh. "L"
would disclose that there is no indication of the time or date it was manufactured. This Office,
thus has no way of determining whether Exh. "L" was really manufactured before the filing of
the aforesaid application which matured into Letters Patent No. UM-4609, subject matter of
the cancellation proceeding.
At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M" which is
the alleged burner cup of an imported "Ransome" burner. Again, this Office finds the same
as unreliable evidence to show anticipation. It observed that there is no date indicated
therein as to when it was manufactured and/or imported before the filing of the application for
issuance of patent of the subject utility model. What is more, some component parts of Exh.
"M" are missing, as only the cup was presented so that the same could not be compared to
the utility model (subject matter of this case) which consists of several other detachable parts
in combination to form the complete LPG burner.
xxx xxx xxx
It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of
Manila Gas and of Esso Gasul marked Exhs. "E" and "F" and on the alleged fact that Manila
Gas Corporation was importing from the United States "Ransome" burners. But the same
could not be given credence since he himself admitted during cross-examination that he has
never been connected with Manila Gas Corporation. He could not even present any
importation papers relating to the alleged imported ransome burners. Neither did his wife. 6

The above findings and conclusions of the Director of Patent were reiterated and affirmed by the
Court of Appeals. 7
The validity of the patent issued by the Philippine Patent Office in favor of private respondent and
the question over the inventiveness, novelty and usefulness of the improved model of the LPG
burner are matters which are better determined by the Patent Office. The technical staff of the
Philippine Patent Office composed of experts in their field has by the issuance of the patent in
question accepted private respondent's model of gas burner as a discovery. There is a presumption
that the Office has correctly determined the patentability of the model 8 and such action must not be
interfered with in the absence of competent evidence to the contrary.

The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the
Court of Appeals, are conclusive on this Court when supported by substantial evidence. Petitioner
has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent
Office and the Court of Appeals.
The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight
to the testimonies of the witnesses of petitioner showing anticipation is not a justification to grant the
petition. Pursuant to the requirement of clear and convincing evidence to overthrow the presumption
of validity of a patent, it has been held that oral testimony to show anticipation is open to suspicion
and if uncorroborated by cogent evidence, as what occurred in this case, it may be held insufficient. 9
Finally, petitioner would want this Court to review all over again the evidence she presented before
the Patent Office. She argues that contrary to the decision of the Patent Office and the Court of
Appeals, the evidence she presented clearly proves that the patented model of private respondent is
no longer new and, therefore, fraud attended the acquisition of patent by private respondent.
It has been held that the question on priority of invention is one of fact. Novelty and utility are
likewise questions of fact. The validity of patent is decided on the basis of factual inquiries. Whether
evidence presented comes within the scope of prior art is a factual issue to be resolved by the
Patent Office. 10 There is question of fact when the doubt or difference arises as to the truth or falsehood
of alleged facts or when the query necessarily invites calibration of the whole evidence considering mainly
the credibility of witnesses, existence and relevance of specific surrounding circumstances, their relation
to each other and to the whole and the probabilities of the situation. 11

Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all
over again the evidence and credibility of witnesses presented before the lower tribunal or office.
The Supreme Court is not a trier of facts. Its jurisdiction is limited to reviewing and revising errors of
law imputed to the lower court, its findings of fact being conclusive and not reviewable by this Court.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the
Philippine Patent Office is AFFIRMED. Costs against petitioner.
SO ORDERED.
Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. 121867 July 24, 1997

SMITH KLINE & FRENCH LABORATORIES, LTD., petitioner,

vs.
COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER and DOCTORS PHARMACEUTICALS, INC. respondents.

DAVIDE, JR., J.:

This is an appeal under Rule 45 of the Rules of Court from the decision 1 4 November 1994 of the
Court of Appeals in CA-G.R. SP No. 33520, which affirmed the 14 February 1994 decision 2 of the
Director of the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) granting a compulsory
non-exclusive and non-transferable license to private respondent to manufacture, use and sell in the
Philippines its own brands of pharmaceutical products containing petitioner's patented pharmaceutical
product known as Cimetidine.

Petitioner is a foreign corporation with principal office at Welwyn Garden City, England. It owns
Philippine Letters Patent No. 12207 issued by the BPTTT for the patent of the drug Cimetidine.
Private respondent is a domestic corporation engaged in the business of manufacturing and
distributing pharmaceutical products. On 30 March 1987, it filed a petition for compulsory
licensing 3 with the BPTTT for authorization to manufacture its own brand of medicine from the
drug Cimetidine and to market the resulting product in the Philippines. The petition was filed pursuant to
the provisions of Section 34 of Republic Act No. 165 (An Act Creating a Patent Office Prescribing Its
Powers and Duties, Regulating the Issuance of Patents, and Appropriating Funds Therefor), which
provides for the compulsory licensing of a particular patent after the expiration of two years from the grant
of the latter if the patented invention relates to, inter alia, medicine or that which is necessary for public
health or public safety. Private respondent alleged that the grant of Philippine Letters Patent No. 12207
was issued on 29 November 1978; that the petition was filed beyond the two-year protective period
provided in Section 34 of R.A. No. 165; and that it had the capability to work the patented product or
make use of it in its manufacture of medicine.

Petitioner opposed, arguing that private respondent had no cause of action and lacked the capability
to work the patented product; the petition failed to specifically divulge how private respondent would
use or improve the patented product; and that private respondent was motivated by the pecuniary
gain attendant to the grant of a compulsory license. Petitioner also maintained that it was capable of
satisfying the demand of the local market in the manufacture and marketing of the medicines
covered by the patented product. Finally, petitioner challenged the constitutionality of Sections 34
and 35 of R.A. No. 165 for violating the due process and equal protection clauses of the
Constitution.
After appropriate proceedings, the BPTTT handed down its decision on 14 February 1994, with the
dispositive portion thereof providing:
NOW, THEREFORE, by virtue of the powers vested in this Office by Republic Act No. 165,
as amended by Presidential Decree No. 1263, there is hereby issued a license in favor of the
herein [private respondent], United Laboratories, Inc., [sic] under Letters Patent No. 12207
issued on November 29, 1978, subject to the following terms and conditions:
1. That [private respondent] be hereby granted a non-exclusive and non-transferable license
to manufacture, use and sell in the Philippines its own brands of pharmaceutical products

containing [petitioner's] patented invention which is disclosed and claimed in Letters Patent
No. 12207;
2. That the license granted herein shall be for the remaining life of said Letters Patent No.
12207 unless this license is terminated in the manner hereinafter provided and that no right
or license is hereby granted to [private respondent] under any patent to [petitioner] or [sic]
other than recited herein;
5. By virtue of this license, [private respondent] shall pay [petitioner] a royalty on all license
products containing the patented substance made and sold by [private respondent] in the
amount equivalent to TWO AND ONE HALF PERCENT (2.5%) of the net sales in Philippine
currency. The term "net scale" [sic] means the gross amount billed for the product pertaining
to Letters Patent No. 12207, less
(a) Transportation charges or allowances, if any, included in such amount;
(b) Trade, quantity or cash discounts and broker's or agent's or distributor's commissions, if
any, allowed or paid;
(c) Credits or allowances, if any, given or made on account of rejection or return of the
patented product previously delivered; and
(d) Any tax, excise or government charge included in such amount, or measured by the
production sale, transportation, use of delivery of the products.
In case [private respondent's] product containing the patented substance shall contain one or
more active ingredients admixed therewith, said product hereinafter identified as admixed
product, the royalty to be paid shall be determined in accordance with the following formula:
Net Sales on Value of Patented
ROYALTY = Admixed Product x 0.025 x Substance

Value of Patented Value of Other
Substance Active Ingredients
4. The royalties shall be computed after the end of each calendar quarter to all goods
containing the patented substance herein involved, made and sold during the precedent
quarter and to be paid by [private respondent] at its place of business on or before the
thirtieth day of the month following the end of each calendar quarter. Payments should be
made to [petitioner's] authorized representative in the Philippines;
5. [Private respondent] shall keep records in sufficient detail to enable [petitioner] to
determine the royalties payable and shall further permit its books and records to be
examined from time to time at [private respondent's] premises during office hours, to the
extent necessary to be made at the expense of [petitioner] by a certified public accountant
appointed by [petitioner] and acceptable to [private respondent].

6. [Private respondent] shall adopt and use its own trademark or labels on all its products
containing the patented substance herein involved;
7. [Private respondent] shall comply with the laws on drugs and medicine requiring previous
clinical tests and approval of proper government authorities before selling to the public its
own products manufactured under the license;
8. [Petitioner] shall have the right to terminate the license granted to [private respondent] by
giving the latter thirty (30) days notice in writing to that effect, in the event that [private
respondent] default [sic] in the payment of royalty provided herein or if [private respondent]
shall default in the performance of other convenants or conditions of this agreement which
are to be performed by [private respondent]:
(a) [Private respondent] shall have the right provided it is not in default to
payment or royalties or other obligations under this agreement, to terminate
the license granted to its, [sic] giving [petitioner] thirty (30) days-notice in
writing to that effect;
(b) Any termination of this license as provided for above shall not in any way
operate to deny [petitioner] its rights or remedies, either at laws [sic] or
equity, or relieve [private respondent] of the payment of royalties or
satisfaction of other obligations incurred prior to the effective date of such
termination; and
(c) Notice of termination of this license shall be filed with the Bureau of
Patents, Trademarks and Technology Transfer.
9. In case of dispute as to the enforcement of the provisions of this license, the matter shall
be submitted for arbitration before the Director of Bureau of Patents, Trademarks and
Technology Transfer or any ranking official of the Bureau of Patents, Trademarks and
Technology Transfer duly delegated by him.
10. This License shall inure to the benefit of each of the parties herein, to the subsidiaries
and assigns of [petitioner] and to the successors and assigns of [private respondent]; and
11. This license take [sic] effect immediately. 4
Petitioner then appealed to the Court of Appeals by way of a petition for review, which was docketed
as CA-G.R. SP No. 33520. Petitioner claimed that the appealed decision was erroneous because:
I
. . . [IT] VIOLATES INTERNATIONAL LAW AS EMBODIED IN THE PARIS CONVENTION
FOR THE PROTECTION OF INDUSTRIAL PROPERTY AND MUST ACCORDINGLY BE
SET ASIDE AND MODIFIED.
II
. . . [IT] IS AN INVALID EXERCISE OF POLICE POWER.
III

CONCEDING ARGUENDO THE QUESTIONED DECISION'S VALIDITY, THE BPTTT'S

PRONOUNCEMENT FIXING THE ROYALTY AT 2.5% OF THE NET WHOLESALE PRICE
IN PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY FACTUAL BASIS AND
AMOUNTS TO EXPROPRIATION OF PRIVATE PROPERTY WITHOUT JUST
COMPENSATION WHICH IS VIOLATE OF THE CONSTITUTION.
IV
. . . [IT] SHOULD NOT HAVE PROCEEDED TO DECIDE THE CASE BELOW FOR
FAILURE OF PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE
JURISDICTIONAL FACT OF PUBLICATION. 5
In its decision of 4 November 1994, 6 the Court of Appeals affirmed in toto the challenged decision. We
quote its findings and conclusion upon which the affirmance is anchored, viz.:

An assiduous scrutiny of the impugned decision of the public respondent reveals that the
same is supported by substantial evidence. It appears that at the time of the filing of the
petition for compulsory license on March 24, 1987, the subject letters Patent No. 12207
issued on November 29, 1978 has been in effect for more than two (2) years. The patented
invention relates to compound and compositions used in inhibiting certain actions of the
histamine, hence, it relates to medicine. Moreover, after hearing and careful consideration of
the evidence presented, the Director of Patents ruled that "there is ample evidence to
show that [private respondent] possesses such capability, having competent personnel,
machines and equipment as well as permit to manufacture different drugs containing
patented active ingredients such as ethambutol of American Cyanamid and Ampicillin and
Amoxicillin of Beecham Groups, Ltd."
As to the claim by the petitioner that it has the capacity to work the patented product
although it was not shown that any pretended abuse has been committed, thus the reason
for granting compulsory license "is intended not only to give a chance to others to supply the
public with the quantity of the patented article but especially to prevent the building up of
patent monopolities [sic]." [Parke Davis v. Doctors Pharmaceuticals, Inc., 14 SCRA 1053].
We find that the granting of compulsory license is not simply because Sec. 34 (1) e, RA 165
allows it in cases where the invention relates to food and medicine. The Director of Patents
also considered in determining that the applicant has the capability to work or make use of
the patented product in the manufacture of a useful product. In this case, the applicant was
able to show that Cimetidine, (subject matter of latters Patent No. 12207) is necessary for
the manufacture of an anti-ulcer drug/medicine, which is necessary for the promotion of
public health. Hence, the award of compulsory license is a valid exercise of police power.
We do not agree to [sic] petitioner's contention that the fixing of the royalty at 2.5% of the net
wholesale price amounted to expropriation of private property without just compensation.
Paragraph 3, Section 35-B, R.A. No. 165, as amended by P.D. No. 1267, states:
Sec. 35-B. Terms and Conditions of Compulsory License.
(1) . . .
(2) . . .

(3) A compulsory license shall only be granted subject to the payment of adequate royalties
commensurate with the extent to which the invention is worked. However, royalty payments
shall not exceed five percent (5%) of the net wholesale price (as defined in Section 33-A) of
the products manufactured under the license.
If the product, substance, or process subject of the compulsory license is involved in an
industrial project approved by the Board of Investments, the royalty payable to the patentee
or patentees shall not exceed three percent (3%) of the net wholesale price (as defined in
Section 34-A) of the patented commodity and/or commodity manufactured under the
patented process, the same rate of royalty shall be distributed to the patentees in rates
proportional to the extent of commercial use by the licensee giving preferential values to the
holder of the oldest subsisting product patent.
The foregoing provision grants the Director of Patents the use of his sound discretion in
fixing the percentage for the royalty rate. In the instant case, the Director of Patents
exercised his discretion and ruled that a rate of 2.5% of the net wholesale price is fair
enough for the parties. In Parke Davis & Co. vs. DPI and Tiburcio, [L-27004, August 6, 1983,
124 SCRA 115] it was held that "liberal treatment in trade relations should be afforded to
local industry for as reasoned out by respondent company, it is so difficult to compete with
the industrial grants [sic] of the drug industry, among them being the petitioner herein, that it
always is necessary that the local drug companies should sell at much lower (than) the
prices of said foreign drug entities." Besides, foreign produce licensor can later on ask for an
increase in percentage rate of royalty fixed by the Director of Patents if local sales of license
should increase. Further, in Price vs.UNILAB, the award of royalty rate of 2.5% was deemed
to be just and reasonable, to wit [166 SCRA 133]:
Moreover, what UNILAB has with the compulsory license is the bare right to
use the patented chemical compound in the manufacture of a special
product, without any technical assistance from herein respondent-appellant.
Besides, the special product to be manufactured by UNILAB will only be
used, distributed, and disposed locally. Therefore, the royalty rate of 2.5% is
just and reasonable.
It appearing that herein petitioner will be paid royalties on the sales of any products [sic] the
licensee may manufacture using any or all of the patented compounds, the petitioner cannot
complain of a deprivation of property rights without just compensation [Price v. UNILAB, L82542, September 19, 1988].
We take note of the well-crafted petition submitted by petitioner albeit the legal milieu and a
good number of decided cases militate against the grounds posited by petitioner. In sum,
considering the well-entrenched jurisprudence sustaining the position of respondents, We
reiterate the rule in Basay Mining Corporation vs.SEC, to the effect that
The legal presumption is that official duty has been performed. And it is
particularly strong as regards administrative agencies vested with powers
said to be quasi-judicial in nature, in connection with the enforcement of laws
affecting particular fields of activity, the proper regulation and/or promotion of
which requires a technical or special training, aside from a good knowledge
and grasp of the overall conditions, relevant to said field, obtaining in the
nations. The policy and practice underlying our Administrative Law is that
courts of justice should respect the findings of fact of said administrative
agencies, unless there is absolutely no evidence in support thereof or such

evidence is clearly, manifestly and patently insubstantial. [G.R. No. 76695,

October 3, 1988, Minute Resolution; Beautifont, Inc., et al. v. Court of
Appeals, et al., G.R. No. 50141, January 29, 1988]
Its motion for reconsideration having been denied in the resolution 7 of 31 August 1995, petitioner filed
the instant petition for review on certiorari with the following assignment of errors:

I
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S
DECISION VIOLATES INTERNATIONAL LAW AS EMBODIED IN (A) THE PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY AND (B) THE GATT
TREATY, URUGUAY ROUND, AND MUST ACCORDINGLY BE SET ASIDE AND
MODIFIED.
II
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S
DECISION IS AN INVALID EXERCISE OF POLICE POWER, ABSENT ANY SHOWING BY
EVIDENCE OF AN OVERWHELMING PUBLIC NEED FOR A COMPULSORY LICENSE
OVER CIMETIDINE IN FAVOR OF PRIVATE RESPONDENT.
III
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S
PRONOUNCEMENT FIXING THE ROYALTY FOR AN INVOLUNTARY LICENSE AT 2.5%
OF THE NET WHOLESALE PRICE IN PHILIPPINE CURRENCY WAS RENDERED
WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO EXPORTATION OF PRIVATE
PROPERTY WITHOUT JUST COMPENSATION AND IS IN VIOLATION OF THE
CONSTITUTIONAL RIGHT TO DUE PROCESS.
IV
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THE BPTTT'S ACTION WAS
RENDERED NULL AND VOID FOR FAILURE OF PRIVATE RESPONDENT TO
AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF PUBLICATION AS REQUIRED
BY LAW.
We resolved to give due course to the petition and required the parties to submit their respective
memoranda, which they did, with that of public respondent filed only on 7 February 1997.
After a careful perusal of the pleadings and evaluation of the arguments adduced by the parties, we
find this petition to be without merit.
In its first assigned error, petitioner invokes Article 5 of the Paris Convention for the Protection of
Industrial Property, 8 or "Paris Convention," for short, of which the Philippines became a party thereto
only in 1965. 9 Pertinent portions of said Article 5, Section A, provide:

A. . . .

(2) Each country of the union shall have the right to take legislative measures providing for
the grant of compulsory licenses to prevent the abuses which might result from the exercise
of the exclusive rights conferred by the patent, for example, failure to work.
xxx xxx xxx
(4) A compulsory license may not be applied for on the ground of failure to work or
insufficient working before the expiration of a period of four years from the date of filing of the
patent application or three years from the date of the grant of the patent, whichever period
expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons.
Such a compulsory license shall be non-exclusive and shall not be transferable, even in the
form of the grant of a sub-license, except with that part of the enterprise or goodwill which
exploits such license.
In is thus clear that Section A (2) of Article 5 above unequivocally and explicitly respects the right of
member countries to adopt legislative measures to provide for the grant of compulsory licenses to
prevent abuses which might result from the exercise of the exclusive rights conferred by the patent.
An example provided of possible abuses is "failure to work;" however, as such is merely supplied by
way of an example, it is plain that the treaty does not preclude the inclusion of other forms or
categories of abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the
Convention, fits well within the aforequoted provisions of Article 5 of the Paris Convention. In the
explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative intent in the
grant of a compulsory license was not only to afford others an opportunity to provide the public with
the quantity of the patented product, but also to prevent the growth of monopolies. 10 Certainly, the
growth of monopolies was among the abuses which Section A, Article 5 of the Convention foresaw, and
which our Congress likewise wished to prevent in enacting R.A. No. 165.

R.A. No. 165, as amended by Presidential Decree No. 1263, promulgated on 14 December 1977,
provides for a system of compulsory licensing under a particular patent. Sections 34 and 35, Article
Two, of Chapter VIII read as follows:
Sec. 34. Grounds for Compulsory Licensing (1) Any person may apply to the Director for
the grant of a license under a particular patent at any time after the expiration of two years
from the date of the grant of the patent, under any of the following circumstances:
(a) If the patented invention is not being worked within the Philippines on a commercial
scale, although capable of being so worked, without satisfactory reason;
(b) If the demand for the patented article in the Philippines is not being met to an adequate
extent and on reasonable terms;
(c) If, by reason of refusal of the patentee to grant a license or licenses on reasonable terms,
or by reason of the conditions attached by the patentee to licensee or to the purchase, lease
or use of the patented article or working of the patented process or machine for production,
the establishment of any new trade or industry in the Philippines is prevented, or the trade or
industry therein is unduly restrained;
(d) If the working of the invention within the country is being prevented or hindered by the
importation of the patented article; or

(e) If the patented invention or article relates to food or medicine or manufactured products
or substances which can be used as food or medicine, or is necessary for public health or
public safety.
(2) In any of the above cases, a compulsory license shall be granted to the petitioner
provided that he has proved his capability to work the patented product or to make use of the
patented product in the manufacture of a useful product, or to employ the patented process.
(3) The term "worked" or "working" as used in this section means the manufacture and sale
of the patented article, of the patented machine, or the application of the patented process
for production, in or by means of a definite and substantial establishment or organization in
the Philippines and on a scale which is reasonable and adequate under the circumstances.
Importation shall not constitute "working."
xxx xxx xxx
Sec. 35. Grant of License. (1) If the Director finds that a case for the grant is a license
under Section 34 hereof has been made out, he shall, within one hundred eighty days from
the date the petition was filed, order the grant of an appropriate license. The order shall state
the terms and conditions of the license which he himself must fix in default of an agreement
on the matter manifested or submitted by the parties during the hearing.
(2) A compulsory license sought under Section 34-B shall be issued within one hundred
twenty days from the filing of the proponent's application or receipt of the Board of
Investment's endorsement.
The case at bar refers more particularly to subparagraph (e) of paragraph 1 of Section 34 the
patented invention or article relates to food or medicine or manufactured products or substances
which can be used as food or medicine, or is necessary for public health or public safety. And it may
not be doubted that the aforequoted provisions of R.A. No. 165, as amended, are not in derogation
of, but are consistent with, the recognized right of treaty signatories under Article 5, Section A (2) of
the Paris Convention.
Parenthetically, it must be noted that paragraph (4) of Section A, Article 5 of the Paris Convention
setting time limitations in the application for a compulsory license refers only to an instance where
the ground therefor is "failure to work or insufficient working," and not to any ground or circumstance
as the treaty signatories may reasonably determine.
Neither may petitioner validly invoke what it designates as the GATT Treaty, Uruguay Round. This
act is better known as the Uruguay Final Act signed for the Philippines on 15 April 1994 by Trade
and Industry Secretary Rizalino Navarro. 11 Forming integral parts thereof are the Agreement
Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services. 12 The Agreement establishing the World Trade
Organization includes various agreements and associated legal instruments. It was only on 14 December
1994 that the Philippine Senate, in the exercise of its power under Section 21 of Article VII of the
Constitution, adopted Senate Resolution No. 97 concurring in the ratification by the President of the
Agreement. The President signed the instrument of ratification on 16 December 1994. 13 But plainly, this
treaty has no retroactive effect. Accordingly, since the challenged BPTTT decision was rendered on 14
February 1994, petitioner cannot avail of the provisions of the GATT treaty.

The second and third assigned errors relate more to the factual findings of the Court of Appeals.
Well-established is the principle that the findings of facts of the latter are conclusive, unless: (1) the

conclusion is a finding grounded entirely on speculation or conjecture; (2) the inference made is
manifestly absurd; (3) there is grave abuse of discretion in the appreciation of facts; (4) the judgment
is premised on a misapprehension of facts; (5) the findings of fact are conflicting; and (6) the Court
of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to
the admissions of both the appellant and appellee. 14 Petitioner has not convinced us that the instant
case falls under any of the exceptions. On the contrary, we find the findings of fact and conclusions of
respondent Court of Appeals and that of the BPTTT to be fully supported by the evidence and the
applicable law and jurisprudence on the matter.

Petitioner's claim of violations of the due process and eminent domain clauses of the Bill of Rights
are mere conclusions which it failed to convincingly support. As to due the process argument, suffice
it to say that full-blown adversarial proceedings were conducted before the BPTTT pursuant to the
Patent Law. We agree with the Court of Appeals that the BPTTT exhaustively studied the facts and
its findings were fully supported by substantial evidence.
It cannot likewise be claimed that petitioner was unduly deprived of its property rights, as R.A. No.
165 not only grants the patent holder a protective period of two years to enjoy his exclusive rights
thereto; but subsequently, the law recognizes just compensation in the form of royalties. 15
In Parke, Davis & Co. v. Doctors' Pharmaceuticals, Inc., 16 we held:
The right to exclude others from the manufacturing, using, or vending an invention relating
to, food or medicine should be conditioned to allowing any person to manufacture, use, or
vend the same after a period of three [now two] years from the date of the grant of the letters
patent. After all, the patentee is not entirely deprived of any proprietary right. In fact, he has
been given the period of three years [now two years] of complete monopoly over the patent.
Compulsory licensing of a patent on food or medicine without regard to the other conditions
imposed in Section 34 [now Section 35] is not an undue deprivation of proprietary interests
over a patent right because the law sees to it that even after three years of complete
monopoly something is awarded to the inventor in the form of bilateral and workable
licensing agreement and a reasonable royalty to be agreed upon by the parties and in default
of such an agreement, the Director of Patents may fix the terms and conditions of the
license.
As to the fourth assigned error, we hold that petitioner can no longer assail the jurisdiction of the
BPTTT, raising this issue only for the first time on appeal. In Pantranco North Express, Inc. v. Court
of Appeals, 17 we ruled that where the issue of jurisdiction is raised for the first time on appeal, the party
invoking it is so barred on the ground of laches or estoppel under the circumstances therein stated. It is
now settled that this rule applies with equal force to quasi-judicial bodies 18 such as the BPTTT. Here,
petitioner have not furnished any cogent reason to depart from this rule.

WHEREFORE, the petition is hereby DENIED and the challenged decision of the Court of Appeals
in CA-G.R. SP No. 33520 is AFFIRMED in toto.
Costs against petitioner.
SO ORDERED.
Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.

G.R. No. 115106 March 15, 1996

ROBERTO L. DEL ROSARIO, petitioner,
vs.
COURT OF APPEALS AND JANITO CORPORATION, respondents.

BELLOSILLO, J.:p
Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1 which set
aside the order of the Regional Trial Court of Makati granting a writ of preliminary injunction in his favor.

The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement against
private respondent Janito Corporation. 2 Roberto L. del Rosario alleged that he was a patentee of an
audio equipment and improved audio equipment commonly known as the sing-along System
or karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as well as Letters Patent No. UM-6237
dated 14 November 1986 issued by the Director of Patents. The effectivity of both Letters Patents was for
five (5) years and was extended for another five (5) years starting 2 June 1988 and 14 November 1991,
respectively. He described his sing-along system as a handy multi-purpose compact machine which
incorporates an amplifier speaker, one or two tape mechanisms, optional tuner or radio and microphone
mixer with features to enhance one's voice, such as the echo or reverb to stimulate an opera hall or a
studio sound, with the whole system enclosed in one cabinet casing.

In the early part of 1990 petitioner learned that private respondent was manufacturing a sing-along
system bearing the trademark miyata or miyata karaoke substantially similar if not identical to the
sing-along system covered by the patents issued in his favor. Thus he sought from .the trial court the
issuance of a writ of preliminary injunction to enjoin private respondent, its officers and everybody
elsewhere acting on its behalf, from using, selling and advertising the miyata or miyata
karaoke brand, the injunction to be made permanent after trial, and praying for damages, attorney's
fees and costs of suit.
On 5 February 1993 the trial court temporarily restrained private respondent from manufacturing,
using and/or selling and advertising the miyata sing-along system or any sing-along system
substantially identical to the sing-along system patented by petitioner until further orders.
On 24 February 1993 the trial court issued a writ of preliminary injunction upon a bond on the basis
of its finding that petitioner was a holder of a utility model patent for a sing-along system and that
without his approval and consent private respondent was admittedly manufacturing and selling its
own sing-along system under the brand name miyata which was substantially similar to the patented
utility mode 3 of petitioner.
Private respondent assailed the order of 24 February 1993 directing the issuance of the writ by way
of a petition for certiorari with prayer for the issuance of a writ of preliminary injunction and a
temporary restraining order before respondent Court of Appeals.

On 15 November 1993 respondent appellate court granted the writ and set aside the questioned
order of the trial court. It expressed the view that there was no infringement of the patents of
petitioner by the fact alone that private respondent had manufactured the miyata karaoke or audio
system, and that the karaoke system was a universal product manufactured, advertised and
marketed in most countries of the world long before the patents were issued to petitioner. The
motion to reconsider the grant of the writ was denied; 4 hence, the instant petition for review.
This petition alleges that: (a) it was improper for the Court of Appeals to consider questions of fact in
a certiorariproceeding; (b) the Court of Appeals erred in taking judicial notice of private respondent's
self-serving presentation of facts; (c) the Court of Appeals erred in disregarding the findings of fact of
the trial court; and, (d) there was no basis for the Court of Appeals to grant a writ of preliminary
injunction in favor of private respondent.5
Petitioner argues that in a certiorari proceeding questions of fact are not generally permitted the
inquiry being limited essentially to whether the tribunal has acted without or in excess of jurisdiction
or with grave abuse of discretion; that respondent court should not have disturbed but respected
instead the factual findings of the trial court; that the movant has a clear legal right to be protected
and that there is a violation of such right by private respondent. Thus, petitioner herein claims, he
has satisfied the legal requisites to justify the order of the trial court directing the issuance of the writ
of injunction. On the other hand, in the absence of a patent to justify the manufacture and sale by
private respondent of sing-along systems, it is not entitled to the injunctive relief granted by
respondent appellate court.
The crux of the controversy before us hinges on whether respondent Court of Appeals erred in
finding the trial court to have committed grave abuse of discretion in enjoining private respondent
from manufacturing, selling and advertising the miyata karaoke brand sing-along system for being
substantially similar if not identical to the audio equipment covered by letters patent issued to
petitioner.
Injunction is a preservative remedy for the protection of substantive rights or interests. It is not a
cause of action in itself but merely a provisional remedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a
threatened or continuous irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated. It is to be resorted to only when there is a
pressing necessity to avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the writ rests upon an alleged existence of an emergency or of a
special reason for such an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the complaint alleges facts which
appear to be sufficient to constitute a cause of action for injunction and that on the entire showing
from both sides, it appears, in view of all the circumstances, that the injunction is reasonably
necessary to protect the legal rights of plaintiff pending the litigation. 6
A preliminary injunction may be granted at any time after the commencement of the action and
before judgment when it is established that the defendant is doing, threatens, or is about to do, or is
procuring or suffering to be done, some act probably in violation of the plaintiff's rights. Thus, there
are only two requisites to be satisfied if an injunction is to issue, namely, the existence of the right to
be protected, and that the facts against which the injunction is to be directed are violative of said
right. 7
For the writ to issue the interest of petitioner in the controversy or the right he seeks to be protected
must be a present right, a legal right which must be shown to be clear and positive.

In this regard Sec. 55 of R.A. 165 as amended, known as The Patent Law, provides
Sec. 55. Design patents and patents for utility models. (a) Any new, original, and
ornamental design for an article of manufacture and (b) new model or implements or
tools or of any industrial product or of part of the same, which does not possess the
quality of invention but which is of practical utility by reason of its form, configuration,
construction or composition, may be protected by the author thereof, the former by a
patent for a design and the latter by a patent for a utility model, in the same manner
and subject to the same provisions and requirements as relate to patents for
inventions insofar as they are applicable, except as otherwise herein provide . . . .
Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985 issued for a term
of five (5) years from the grant of a Utility Model herein described
The construction of an audio equipment comprising a substantially cubical casing
having a window at its rear and upper corner fitted with a slightly inclined control
panel, said cubical (casing) having a vertical partition wall therein defining a rear
compartment and a front compartment, and said front compartment serving as a
speaker baffle; a transistorized amplifier circuit having an echo section and writhed in
at least the printed circuit boards placed inside said rear compartment of said casing
and attached to said vertical partition wall, said transistorized amplifier circuit capable
of being operated from outside, through various controls mounted on said control
panel of such casing; a loud speaker fitted inside said front compartment of said
casing and connected to the output of the main audio amplifier section of said
transistorized amplifier circuit and a tape player mounted on the top wall of said
casing and said tape player being connected in conventional manner to said
transistorized amplifier circuit. 8
Again, on 14 November 1986 petitioner was granted Letters Patent No. UM-6237 for a term of five
(5) years from the grant of a Utility Model described as
In an audio equipment consisting of a first cubical casing having an opening at its
rear and upper rear portion and a partition therein forming a rear compartment and a
front compartment serving as a loud speaker baffle, a control panel formed by
vertical and horizontal sections, a transistorized amplifier circuit wired in at least two
printed circuit boards attached at the back of said control panel, a first loud speaker
fitted inside said first compartment of such first casing and connected to the output of
said transistorized amplifier circuit; the improvement wherein said control panel being
removably fitted to said first cubical casing and further comprises a set of tape
recorder and tape player mounted on the vertical section of said control panel and
said recorder and player are likewise connected to said transistorized amplifier
circuit; a second cubical casing having an opening at its rear, said second cubical
casing having (being?) provided with a vertical partition therein defining a rear
compartment and a front compartment, said rear compartment being provided with a
door and enclosing therein a set of tape racks and said front compartment serving as
loud speaker baffle, said second cubical casing being adapted to said first cubical
casing so that said first and second casings are secured together in compact and
portable form; and a second loud speaker fitted inside said front compartment of said
casing and connected to the output of said amplifier circuit. 9
The terms of both Letters Patents were extended for another five (5) years each, the first beginning
2 June 1988 and the second, 14 November 1991.

The Patent Law expressly acknowledges that any new model of implements or tools of any industrial
product even if not possessed of the quality of invention but which is of practical utility is entitled to a
patent for utility model. 10 Here, there is no dispute that the letters patent issued to petitioner are for utility
models of audio equipment.

In issuing, reissuing or withholding patents and extensions thereof, the Director of Patents
determines whether the patent is new and whether the machine or device is the proper subject of
patent. In passing on an application, the Director decides not only questions of law but also
questions of fact, i.e. whether there has been a prior public use or sale of the article sought to be
patented. 11 Where petitioner introduces the patent in evidence, if it is in due form, it affords a prima
facie presumption of its correctness and validity. The decision of the Director of Patents in granting the
patent is always presumed to be correct, and the burden then shifts to respondent to overcome this
presumption by competent evidence. 12

Under Sec. 55 of The Patent Law a utility model shall not be considered "new" if before the
application for a patent it has been publicly known or publicly used in this country or has been
described in a printed publication or publications circulated within the country, or if it is substantially
similar to any other utility model so known, used or described within the country. Respondent
corporation failed to present before the trial court competent evidence that the utility models covered
by the Letters Patents issued to petitioner were not new. This is evident from the testimony of Janito
Cua, President of respondent Janito Corporation, during the hearing on the issuance of the
injunction, to wit
Q. Mr. Cua, you testified that there are (sic) so many other
companies which already have (sic) the sing-along system even
before the patent application of Mr. del Rosario and as a matter of
fact you mentioned Sanyo, Sony and Sharp, is that right?
A. Musicmate and Asahi.
Q. Now do you recall that your lawyer filed with this Honorable Court
an Urgent Motion to Lift Temporary Restraining Order of this
Honorable Court. I am sure you were the one who provided him with
the information about the many other companies selling the singalong system, is that right? These 18 which you enumerated here.
A. More than that because. . . .
Q. Now you will agree with me that in your statement Sharp you put
the date as 1985 agreed?
A. No.
Q. You mean your lawyer was wrong when he put the word Sharp
1985?
A. Maybe I informed him already.
xxx xxx xxx

Q. You mean your lawyer was wrong in alleging to this Court that
Sharp manufactured and sold (in) 1985 as found in the Urgent
Motion?
A. Since it is urgent it is more or less.
Q. The same also with Sanyo 1985 which you put, more or less?
A. Sanyo is wrong.
Q. It is not 1985?
A. Sanyo is 1979 I think.
Q. So this is also wrong. Panasonic 1986 is also wrong?
A. Panasonic I think.
Q. So you don't think this is also correct.
A. The date?
Q. So you don't think also that this allegation here that they
manufactured in 1986 is correct?
A. Wrong. Earlier.
Q. National by Precision Electronic 1986 this is also wrong?
A. I think earlier.
Q. So that means all your allegations here from 2 to 5 are wrong?
OK. By Philipps Philippines 1986, this is also correct or wrong?
A. More or less. We said more or less.
Q. Nakabutshi by Asahi Electronics that is also wrong?
A. No that is 1979.
Q. Electone by DICO 1989 is this correct or wrong?
A. Correct. More or less.
Q. Skylers 1985 is that correct or wrong?
A. It is more or less because it is urgent. We don't have time to exact
the date.

Q. Musicmate of G.A. Yupangco 1981 this is more or less? You are

not also sure?
A. 95% sure.
Q. Now you are sure 1981.
A. This one because. . . .
Q. Mr. Witness so you are now trying to tell this Honorable Court that
all your allegations here of the dates in this Urgent Motion except for
Musicmate which you are only 95% sure they are all wrong or they
are also more or less or not sure, is that right?
A. More or less.
Q. Now do you have any proof, any advertisement, anything in writing
that would show that all these instruments are in the market, do you
have it.
A. No I don't have it because. . . .
Q. No I am satisfied with your answer. Now Mr. Witness, you don't
also have a proof that Akai instrument that you said was also in the
market before 1982? You don't have any written proof, any
advertisement?
A. I have the product.
Q. But you have not brought the product in (sic) this Honorable Court,
right?
A. No. 13
As may be gleaned herein, the rights of petitioner as a patentee have been sufficiently established,
contrary to the findings and conclusions of respondent Court of Appeals. Consequently, under Sec.
37 of The Patent law, petitioner as a patentee shall have the exclusive right to make, use and sell
the patented machine, article or product for the purpose of industry or commerce, throughout the
territory of the Philippines for the term of the patent, and such making, using or selling by any person
without authorization of the patentee constitutes infringement of his patent.
Petitioner established before the trial court that respondent Janito Corporation was manufacturing a
similar sing-along system bearing the trademark miyata which infringed his patented models. He
also alleged that both his own patented audio equipment and respondent's sing-along system were
constructed in a casing with a control panel, the casing having a vertical partition wall defining the
rear compartment from the front compartment, with the front compartment consisting of a loud
speaker baffle, both containing a transistorized amplifier circuit capable of being operated from
outside through various controls mounted on the control panel, and that both had loud speakers
fitted inside the front compartment of the casing and connected to the output of the main audio
amplifier section both having a tape recorder and a tape player mounted on the control panel with
the tape recorder and tape player being both connected to the transistorized amplifier circuit. 14

Respondent Janito Corporation denied that there was any violation of petitioner's patent rights, and
cited the differences between its miyata equipment and petitioner's audio equipment. But, it must be
emphasized, respondent only confined its comparison to the first model, Utility Model No. 5269, and
completely disregarded Utility Model No. 6237 which improved on the first. As described by
respondent corporation, 15 these differences are
First. Under Utility Model 5269, the unit is a substantially cubical casing with a
window at its rear and upper corner fitted with slightly inclined control panel, while
the miyata equipment is a substantially rectangular casing with panel vertically
positioned.
Second. Under Utility Model 5269, the cubical casing has a vertical partition wall
defining a rear compartment and a front compartment serving as a speaker baffle,
while the miyata equipment has no rear compartment and front compartment in its
rectangular casing; it has only a front compartment horizontally divided into 3
compartments like a 3-storey building, the 1st compartment being a kit, the 2nd also
the speaker, and the 3rd are kits.
Third. Under Utility Model No. 5269, a transistorized amplifier circuit with an echo
section wired in at least 2 printed circuit boards is placed inside the rear
compartment of the casing and attached to the vertical partition wall, the printed
circuit board having 1 amplifier and 1 echo, while in the miyataequipment the
amplifier is mainly IC (Integrated Circuit) powered with 8 printed circuit boards
almost all of which are IC controlled, with 1 amplifier with power supply, 1 main tuner,
1 equalizer (3-band), 1 IC controlled volume control, 1 echo IC, 1 tape pream, 1
instrument and 1 wireless microphone.
Fourth. Under Utility Model 5269, 4 printed circuits are placed inside the
compartment of its casing attached to the vertical partition wall, while in the miyata,
the 7 printed circuit boards (PCB) are attached to the front panel and 1 attached to
the horizontal divider.
Fifth. Under Utility Model 5269, there are various controls mounted on the control
panel of the casing, while in miyata, the various controls are all separated from the
printed circuit boards and the various controls are all attached thereto.
Sixth. Under Utility Model 5269, a loud speaker fitted inside the front compartment of
the casing is connected to the output of the main audio amplifier section of the
transistorized amplifier circuit, while in miyata, there is no other way but to use 2 loud
speakers connected to the amplifier.
Seventh. Under Utility Model 5269, a tape player is mounted on the top wall of the
casing, while inmiyata, 2 tape players are used mounted side by side at the front.
It is elementary that a patent may be infringed where the essential or substantial features of the
patented invention are taken or appropriated, or the device, machine or other subject matter alleged
to infringe is substantially identical with the patented invention. In order to infringe a patent, a
machine or device must perform the same function, or accomplish the same result by identical or
substantially identical means and the principle or mode of operation must be substantially the
same. 16

It may be noted that respondent corporation failed to present before the trial court a clear, competent
and reliable comparison between its own model and that of petitioner, and disregarded completely
petitioner's utility Model No. 6237 which improved on his first patented model. Notwithstanding the
differences cited by respondent corporation, it did not refute and disprove the allegations of
petitioner before the trial court that: (a) both are used by a singer to sing and amplify his voice; (b)
both are used to sing with a minus-one or multiplex tapes, or that both are used to play minus-one or
standard cassette tapes for singing or for listening to; (c) both are used to sing with a minus-one
tape and multiplex tape and to record the singing and the accompaniment; (d) both are used to sing
with live accompaniment and to record the same; (e) both are used to enhance the voice of the
singer using echo effect, treble, bass and other controls; (g) both are equipped with cassette tape
decks which are installed with one being used for playback and the other, for recording the singer
and the accompaniment, and both may also be used to record a speaker's voice or instrumental
playing, like the guitar and other instruments; (h) both are
encased in a box-like cabinets; and, (i) both can be used with one or more microphones. 17
Clearly, therefore, both petitioner's and respondent's models involve substantially the same modes
of operation and produce substantially the same if not identical results when used.
In view thereof, we find that petitioner had established before the trial court prima facie proof of
violation of his rights as patentee to justify the issuance of a writ of preliminary injunction in his favor
during the pendency of the main suit for damages resulting from the alleged infringement.
WHEREFORE, the Decision of the Court of Appeals dated 15 November 1993 is REVERSED and
SET ASIDE and the Order of the trial court dated 24 February 1993 granting petitioner the writ of
injunction is REINSTATED.
The trial court is directed to continue with the proceedings on the main action pending before it in
order to resolve with dispatch the issues therein presented.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. L-20354

July 28, 1969

GERARDO SAMSON, JR., petitioner,

vs.
FELIPE TARROZA and DIRECTOR OF PATENTS, respondents.
Hermenegildo V. Lopez for petitioner.
Isaac S. Puno, Jr. for respondent Felipe Tarroza.
Office of the Solicitor General for respondent Director of Patents.

FERNANDO, J.:
With the statutory recognition of patentability based on the "practical utility" concept 1 thus rendering
clear that a patent is not solely to be earned under the "flash of genius" theory, 2 this petition for the
cancellation of a utility model patent for a Side Tilting-Dumping Wheelbarrow granted to respondent
Felipe A. Tarroza was correctly denied by respondent Director of Patents. Petitioner Gerardo
Samson, Jr., himself the grantee of a utility model patent for a Dumping and Detachable
Wheelbarrow, lacked any legal justification for such a plea. So respondent Director ruled. Not
satisfied, petitioner elevated the matter to us for review. There is no reason why a different outcome
is to be expected. His appeal must fail.
Petitioner was, on May 22, 1958, awarded Utility Model Patent No. 27 for the above type of
wheelbarrow which, as noted in the decision, "consists of a wheeled carriage base and an upper
pivoted and detachable carrying tray. The carriage base is comprised of a wheel and two equal
lengths of continuous pipes bent to provide wheel forks at the front and at the rear to support the
back portion of the tray, with the ends of the pipes being adopted as the carrying handles for the
wheelbarrow. The two pipes thus bent are joined together by cross braces in the front and at the
rear. The tray is removably pivoted at its front end through hook catches at its bottom corners, to the
forward cross brace, and its rear end rests solidly over the rear portion of the legs. To dump the load
the user pulls a dumping handle at the back end to cause the tray to pivot upwardly about the front
brace to a position of about 45 degrees with the horizontal and with its front end panel being
supported by the wheel." 3
Respondent's Side Tilting-Dumping Wheelbarrow, on the other hand, consists "of a wheeled carriage
made of tubular frames essentially as in petitioner's. Welded transversely to the parallel frames are
two brackets provided with holes designed to complement similar holes on brackets provided on the
tray. The brackets on the tray are so placed that with the provision of a bolt through the openings the
tray may be tilted approximately 170 degrees to the left or to the right of the wheelbarrow with its
axis running longitudinally through the center of the bottom face of the tray." 4
There is an express recognition under the Patent Law, as already noted, that any new model of
implements or tools or of any industrial product even if not possessed of the quality of invention but
which is of "practical utility" is entitled to a "patent for a utility model." From the above description of
the side tilting-dumping wheelbarrow, the product of respondent's ingenuity and industry, it is quite
apparent that it has a place in the market and possesses what the statute refers to as "practical
utility." The requirement explicitly set forth in the statute has thus been met. Respondent Tarroza is
entitled to its benefits. The grant to him of a patent for a utility model is in accordance with law.
There was no reason, therefore, for its cancellation. So it was held by the Director of Patents. That
decision as already noted should stand.
Moreover, in appeals from a decision of the Director of Patents, only questions of law may be
reviewed, findings of facts being conclusive unless unsupported by substantial evidence. So it was
decided in Che v. Philippines Patent Office. 5 As was emphasized in Bagano v. Director of Patents: "It
is almost trite to state here that in cases of the nature as the one at bar, only questions of law are to
be raised in order that this Court could exercise its appellate jurisdiction and review the
decision." 6 The above well-settled doctrines suffice to demonstrate that this petition for review, as
noted at the outset, is without merit. It was not error then, to reiterate, for the respondent Director of
Patents to deny the cancellation of the utility patent granted respondent Tarroza. To borrow from the
language of the Che opinion: "Even on the sole issue alone, the petition for review must fail."
Another alleged error was imputed to respondent Director of Patents. It would find fault with his
failing to hold that respondent Tarroza "was not the true and actual" author of the mechanical

contrivance for which he was granted a utility model patent. This is what the appealed decision has
to say on this point: "Petitioner's theory with respect to the second ground for cancellation, to wit:
that respondent is not the true and actual inventor or designer of the utility model is premised on the
fact that because of the proximity of the two, the petitioner and the respondent being brothers-in-law,
and living in adjoining residential lots, the latter has had ample time and opportunity to observe and
copy the former's wheelbarrow. But the testimonial evidence thus presented is not clear, satisfactory,
and free from doubt, in the face of allegations to the contrary by the respondent." 7 The futility of such
an assignment of error is thus apparent. Again, it is factual in character. It is not for us, as noted
above, to review or revise the same, there being no showing of a lack of substantial evidence in
support thereof.
WHEREFORE, the decision of April 13, 1962 of respondent Director of Patents denying the petition
for the cancellation of Utility Model Letters Patent No. 62 in favor of respondent Tarroza is hereby
affirmed. With costs against petitioner.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Capistrano,
Teehankee and Barredo, JJ., concur.
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